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You have completed the “rough sort” and got rid of the junk, and you sorted your big pile into smaller ones.

Third Step: Breakdown your categories and set up files

Take the piles from last week’s first sort and start breaking them down to smaller groups. The financial pile now becomes your individual banks, credit cards, investments, etc.

(What about those papers that don’t fall into obvious categories? Make one pile personal items and deal with those later. This might include magazine articles for day trips, an item you might want to buy, a hairstyle you want to show your stylist, information about different counter top materials…you get the picture. We are focusing on financial papers right now. We will come back to these personal papers later….)

Next week we are going to make file folders and put them in a place that makes sense (not the kitchen table or the floor)

Here are a few good links to help you with your tax preparation.

selftax.com online tax preparation from FREE….
Dennis Middleton CPA If you are looking for a CPA to help you with your taxes, I recommend Dennis.

Last week you completed the “rough sort” and got rid of the junk. If you still have questions of what can be tossed, see the IRS link below.

Second Step: Sort Like with Like

*Take that big pile from your quick “rough sort” and start to break it down.

*Use BIG categories like insurance, auto, financial, medical.

*Don’t get hung up on smaller categories and the specifics (yet). Those will come later.

Most likely you will have several types of insurances, but for right now celebrate the fact that you got all the insurance paper in one place. The same is true with financial: banks, credit cards, investments, etc.

Next week we will move to step three: setting up files

Incredibly useful links for Tax Preparation

Click on these links below for useful information for tax preparation.
Self Tax.com This site has FREE through very inexpensive online tax prep.
Dennis Middleton CPA.com If you are looking for a CPA to help you with your taxes, I recommend Dennis.
IRS.gov IRS guidelines for paper retention Here is the source from the IRS.

Tax Paperwork; Where to Start

It may only be February, but it is never too early to start organizing to prepare your taxes.

First Step: get rid of the junk

Wherever you keep your paperwork: the kitchen counter, dining table, home office floor, all of the above…it is time to sort through it and get to the important stuff. Keep in mind a main purpose of getting organized is to find things later. It is really hard to find the important things when they are burried under those that are not important. That is the clutter.

Do a “rough sort”.
1. Quickly start tossing the junk.
2. Pull out catalogs and magazines you will read later.
3. Keep a big pile of everything you are keeping.
Don’t get bogged down with what those things are and where they will go. Just slug through this “rough sort” and get rid of the junk.

What is the Junk?
Third Class mail, any solicitations you did not request, and coupons you will never use.

BONUS: You can see your counter, table or floor and even use it.

Next week we will move to step two.

Tax Time Tips

Taxes and death…inevitable to all, and we all agree that preparing your taxes is not our favorite thing to do. I personally can’t save you money, or make this go away, but I can offer a few ideas to save you time and lower the frustration levels.
1. Set a time line. You need to know who is going to prepare your forms. Is this you or an outside service like an accountant or tax preparer? If you are going outside, you need to know the deadline to get them all your supporting documents. If you are preparing your own taxes, pull out your calendar, work backwards from the 4/15 deadline, and make appointments with yourself. Include all the steps listed below.
2. Pull all the supporting paperwork together. Sort in to main categories including: income (wages and salary doc.s, investing income, and more), deductions (Contributions, business expenses, etc.), any other supporting documents.
3. Clear the clutter in your work space. At a minimum clear an area at your desk, computer, where-ever you are going to do the actual work. Other papers and projects will just distract and bother you while you need to concentrate on your taxes.
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Hint: keep all you papers together between work sessions. File folders for each of the categories listed above will help you keep things organized. Make sure they are clearly and boldly labeled.
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4. Purchase and install tax prep. software if you are using this.
5. File your taxes either on-line or in the mail no later than April 15th.
6. Set up a better filing and storing system for next year. Yes, do it now while it is top of mind, while you have good ideas for how to make this easier next time and so that you can use it all year!
Good luck and I hope you meet the deadline!