Start Now: Get Organized for Tax Filing in 2010

If you are like many Americans, you wait until April to start worrying about filing your taxes each year. By then, it becomes a mad dash to find all the paperwork you need to file by the April 15^th tax deadline. This year – why not start now and get yourself organized for your 2010 tax filing? With just a few adjustments to how you store your documents and tax related information, you will find the tax season much less stressful.

Organizing Paperwork

Instead of running through your house frantically opening drawers and file cabinets in search of paperwork you know you have “somewhere” the night before taxes are due, a better way is to set yourself up with a folder. Label the folder “2010 Taxes” and every time you receive anything that you’ll need to file taxes, you just slide it into the folder. If you’re not sure what you’ll need to file your taxes, take a look at the first page of IRS form 1040 – it lists a majority of documents you’ll need come tax time.

Documents to Save:

Do you have dependents? Keep a sheet of paper in your folder that includes their social security numbers so you don’t need to go in search of it at tax time.
Do you receive alimony? Add any receipts or documentation regarding your alimony payments in your folder.
If you receive W-2’s, 1099 Misc forms, or other documents that show what you’ve earned in wages and salaries, slide them into the folder. These are usually mailed in January for the previous year.
If you receive bank documents for interest and/or dividends earned, slide them into the folder.
If you receive notification of taxable refunds or credits from state or local income taxes, keep this paperwork in the folder.
If you made or lost money trading stocks or other securities, add the documentation to your folder. Consider completing a Schedule D to save your accountant or tax preparer time.
If you earned any other income in 2010, keep track of the documents that prove the amount earned. For example, this could be distribution from annuities, IRA’s or pensions, farming income, royalties, partnerships.
If you received unemployment compensation of $2,400 or more, you’ll need to claim it as income at tax time. (But if you have job search related expenses, keep track of them as you can deduct them at tax time to reduce your taxable income.)
If you received social security benefits you will need to have documentation at tax time.

Possible Deductions:

Keep receipts of medical related expenses (doctor bills, parking fees and tolls to appointments, etc). If you have a health savings account, keep track of your contributions and fees associated with the account.
Keep all documents related to your education expenses if you’re attending college or repaying student loans. Possible education expenses might include tuition, fees, student loan interest, etc.
Keep any paperwork showing alimony paid.
Document real estate taxes, mortgage interest, home improvements.

Organizing Paperwork for Business Owners

If you operate a small business, you’ll have more paperwork to keep track of for tax filing. Throughout the year, you’ll want to keep track of your income and expenses. Even if you’ll be using a professional tax preparer or accountant, you’ll want to keep your information organized to save them time (and yourself money!)

Keep all receipts for expenses related to your business. If possible, get an inexpensive accordion file from an office supply store or dollar store, label it with the categories of expenses your business uses, and slide receipts into the appropriate category. Possible categories might include: travel, meals and entertainment, office supplies, postage, educational materials.

Keeping your paperwork organized throughout the year eliminates the panic and frustration you experience at the last minute.