In the next several weeks, our 1099s, W2s, and other tax-related documents will be making their way to our mailboxes. This means a big mess of paperwork come April. Make it easy on yourself by organizing everything in a three folder system.
This suggestion comes via The Motley Fool, and it’s a relatively simple task. Organize all of your tax paperwork into three folders:
Folder #1: Income: Your 1099s and W2s would go here. These include reported earnings for the year, whether it’s through your job, savings account interest, dividends, etc.
Folder #2: Expenses and Deductions: The Fool explains, “Here you’ll keep mortgage statements, investment-related expenses, medical bills, child care costs, and non-reimbursable/employment-related gas, food, and lodging receipts.” In short, keep receipts and statements for all of the deductions you’ll take at tax time.
Folder #3: Investments: This is where you’ll keep track of all of your investment statements, dividend notices, purchase receipts and any other investment-related paperwork you might need in April. You can further divide this folder into taxable, deductible/tax-deferred, and nondeductible investments.
It’s an easy enough system that can help make doing your taxes less of a headache. They offer a few tax prep tips for each category, too, so you’ll definitely want to check out the full post at the link below.
By: Kristin Wong