Paper Organizing Throughout the Year For Tax Season Preparedness

Apartment Therapy's Home Remedies

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When I asked my "tax guy" for tips on getting organized for tax season, he emphasized just one thing: file relevant papers away throughout the year instead of scrambling when Uncle Sam comes calling.

This means knowing what papers are needed for taxes and what papers aren't. Things you might collect throughout the year: any business-related expense receipts, proof of charitable donations, real estate and property tax statements, and records of the sale of any assets and stocks. Cull these with year-end statements and you'll be ready for tax season without sweating it. Here's what I do to keep any tax-related papers in order throughout the year as they trickle in:

Start a new file for each new tax year. Put tax-relevant papers/receipts into that folder throughout the year instead of into categorized files. For instance, if you have a "healthcare" file, you might keep insurance handbooks and bill stubs in that file. But it can pay to keep health-related expense receipts in a "tax" folder so those expenses can be deducted at the end of the year if they add up. Likewise, you might have an "investment" file. But if you sell stocks during the year at a gain or loss, you might put the receipt from that sale in your "tax" folder instead. This saves you from combing back through all of your files come tax season, as all tax-relevant papers are already stored together.

What steps do you take throughout the year to assure you are prepared when it's time to file taxes?

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(Image credits: Janel Laban)