Organizing for tax time

It is not too soon to be getting ready for tax time. Actually, this should have been started a year ago for this year's tax season. Hopefully you have done some tax organizing and filing for this tax season throughout the year. I remember my Dad's system when it came time for tax season. In our old farm house, we had a living room in between the kitchen and parlor. For several days, we couldn't do anything in the living room because the table and floor were filled with papers, boxes of receipts, canceled checks and bank statements. It seemed like it took him forever to wade through everything, sorting, tossing, making lists. Finally he was ready, threw it all in a big box and went to his tax preparer. That was not a pleasant time for the family.

My taxes are much simpler. But I think my tax tracking system would have served him well if it were available at the time. He didn't have a computer and tracking software I use. But I think he could have used a filing cabinet to better advantage. When it is time to go to my tax preparer, I just pull a file from the file cabinet, run a report on my computer, and I'm ready to go. It's that simple. I'll share my tracking system later in this post.

If you have not done any tax organizing throughout the year and put it all in a box like my Dad did, then you can still take out the box and follow the filing and/or tracking procedures listed below. This will work whether you do your own taxes, or use a professional tax preparer.

When you get your receipts for business purchases, medical or dental treatment, household expenses, etc. you should decide immediately if it is a tax related expense. If it is, save it in a "Tax Receipts" file. If you don't have one, buy a simple filing cabinet. If the receipt has nothing to do with income tax issues, then decide immediately what you will do with it. If you don't need to save it, then toss it. There is no need to wade through tons of receipts later, only to toss them at that time. My dad had a huge waste basket that needed to be emptied several times during his "tax time" because he had saved everything. If you need to save a receipt for a warranty, for example, then file it in a "Warranty File." Decide then and there if it needs to be filed, then file it rather than putting everything in one big box to go through at the end of the year.

If your Tax Receipts need to be further separated, make separate tax-related files. You can have files for "Medical-Dental," "Auto Expenses," "Taxes Paid". Think through your "Itemized Deductions" form from your last tax filing and you will get a good idea of how much you need to separate out your tax receipts. If there are just a few, they can all go in one file. More on tracking them in a bit. Just be patient please. If you save some receipts for purposes other than taxes, you can have an "Auto Expenses" file and a "Taxes-Auto Expenses" file, for example. Whatever works for you to be able to find them later when you need them, do that. The simpler the better. But do it, and stick to it. It doesn't need to be perfect right now, but it has to be started. You can perfect it as you go, deciding what works and what doesn't.

Starting soon, you will begin receiving W-2s, Interest statements, etc. Be sure to file them away immediately so you don't lose them. You will need all these tax related statements whether you use a tax preparer or do your own taxes.

Now for my tracking system. I use Quicken to track all my tax related income and expenses. There is a 2007 version out, Quicken(R) Deluxe 2007 Whenever I have a tax related expense, such as a medical or dental expense, I enter it in Quicken. It will let me assign a category, such as "Medical." At any time during the year, or at tax time, Quicken can run a report for all tax related items, dividing them into each category I've assigned. So if I want to know how much I have in medical expenses, it will run the report listing each entry, who the medical provider was, the specific category, and amount. Then it gives a final total. When it is tax time, I simply run that report, grab my "Tax File" and head to my tax preparer. She simply enters the information from the report I've run, and I'm done. It is really quick and painless. The reports can be customized in many way, which really makes tax time easier. Business and household expenses can all be tracked separately simply by assigning appropriate categories. No fuss, no muss.


If you like to prepare your own taxes, TurboTaxTurboTax Basic 2006 - complete package works very well. I used it for a number of years with great satisfaction. Once you've organized your tax receipts and run your reports, it is easy to plug in the figures.

Again, if you haven't done any organizing, it is not too late to start. It will take a little longer the first time to get files set up, etc. But once you've got that done, it will be much easier. Tax time doesn't have to be the headache we usually make it. A little organizational effort along the way will pay big dividends in the long run.