It’s tax season. This is a truly exhausting period of time for many, as they wonder how much they owe, where their documents are, etc. But it doesn’t have to be that way.
One simple trick that you should do every January is to set up two folders for the year. Put them in the front of your desk drawer where they are super easy to find. Label the first folder “Taxes 2017” and label the second folder “Healthcare Expenses 2017”.
I use these folders to capture everything related to taxes and healthcare expense during the year. If I’m not sure, I still put it in the folder. And here’s my method. I put whatever document I have in the back of the folder. This means that they are in chronological order at any point in the year, with the earliest ones on top.
If I donate to charity, I put the receipt in the back of the tax folder. If I go to the dentist, I put the receipt in the back of the Healthcare Expenses folder. When I pay the property tax bill (I don’t have a mortgage anymore), then I put it in the back of the tax folder. You get the idea.
For those of you who work for an employer and get a W-2, that’s about all you need. If you also have other income, pensions or social security and need to estimate and pay quarterly taxes, I do one other thing. I fill in 4 tax vouchers, estimating what I will have to pay. And then I put the dates in my calendar so I don’t miss it. I used to do this in paper and envelopes, but now it’s all done electronically. So I have a spreadsheet that helps me estimate quarterly taxes.
The key is to spend a little time up front to get organized. This will give you peace of mind throughout the year, and a much easier tax season next year.
Let me know what systems you guys use.