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Clutter Video Tip: How to File Tax Documents

Procrastination, even in moderation, can cause great aggravation. But accomplishments in your regimens can make your mood benevolent.  Having the right systems in place and tools at hand can make these regimens much more achievable. Watch this video for strategies to organize your tax paperwork. Following these tips will make tax time less stressful and more efficient. Think of it as removing the impediments to this persistent predicament, which will leave you feeling magnificent!

(Click here to watch on YouTube if you can’t see the embedded player. Or watch the video at http://bit.ly/TCDTax.)

Transcript:

Hi. I’m Lorie Marrero, and today’s Clutter Video Tip is about everybody’s favorite subject, doing your taxes. Everyone asks me about the perfect system for doing this very dreaded chore. And I want to make a couple of distinctions for you today.

First, there is a big difference between doing your personal income taxes and doing taxes for a small business. For a small business, you do have to keep every receipt and you have to have that entered into some accounting software and be very businesslike about it. But for your personal return, most people do not need to keep every receipt for every grocery bill or every pack of gum that they buy or every tank of gasoline, it really isn’t necessary. What you need to focus usually most on are the year-end statements that you receive, usually in January, for your mortgage company and your employer and any contracted work that you do, and also any donation receipts for Goodwill or other things like that that pertain to your return that are going to be necessary directly when you are filling out that tax return. So, what we have found is for most people, most households, one folder is adequate to hold all of this information throughout the year.

The other distinction I want to make for you today is the difference between action papers and reference papers. So, this is my income taxes file that I have in my action file drawer. And then I also have a file cabinet that’s called my reference filing cabinet where all of my past paperwork that isn’t recent, relevant, or anything that I really need to look at very often. That stuff is all put away, and the action file drawer is the one I spend my time in. It has my projects, bills to pay, other things like that, are my active papers. A big mistake people make is mixing up the two. So, having your current active tax year in your action file drawer is an important separation that you can make. And again, just collect all that stuff throughout the year and then you’ve got it all in one place when you’re ready to do your tax return.

Now that leads me to the other question that most people ask me and that is, how long do I need to keep all of this paperwork? Most experts agree that you should keep tax supporting documents for six to seven years and the tax returns themselves indefinitely. Now, each year when you do your tax return it’s a great time to purge your files from the years past. And of course you need a good shredder to do that. I get to see all of the cool new tools that come out and I’m very proud to actually represent this new shredder. It’s very different, it’s hands free. You can take up to 60 sheets of paper, even if they’re stapled or paper-clipped, and you can put them in the top here and shut the lid, and it does all of the feeding through of the paper for you. So you can be more productive and get on to doing something else, like finishing your tax return, and it does all the work for you. This is the Swingline Stack and Shred 60 X. (Update August, 2016: Popup link is no longer active, please click here for updated link, or contact us at [email protected] with questions.)

And if you’d like to save some more money on your tax return this year, we have a resource for you on our Free Tips page at https://www.clutterdiet.com/freetips. On the left side you’ll see our Donate for Dollars tracking sheet where you can track all of your donations to Goodwill and make sure that you’re getting the maximum fair market value for all of those deductions and saving a lot more money.

See you next time, and may you always be happy and grateful for having more than enough.

You may have been searching for preparing for tax season or stress free tax preparation.

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