Less Taxing Tax Prep

BACK TO BASICS | by JANNA LUFKIN

TAXES. UGH — JUST THE THOUGHT OF THEM MAKES US CRINGE! However, since they’re inevitable, the sooner they’re attended to, the less stressed you’ll be.

© iSTOCKPHOTO.COM

January is the best time to get started. But if you didn’t do it last month, do it now!

Here’s a system to make tax time easier:

• File only the current year’s paperwork.
• Purchase a shredder!
• Clear out papers that you will NOT need at your fingertips in the coming year.
• Shred sensitive material not required for tax purposes.
• Alphabetize file jackets (hanging files) by categories and label. For example: Autos, Banking, Credit Cards, Higher Education Expenses, Insurance, Investments, etc.
• Label file folders (these will be inserted into your individual hanging jackets). For example, under Autos, if you have more than one car, make a folder for each; banking, make a folder for each account; credit cards, a file for each; and so on.
• Now that your daily files are set up, use the same system and include the year for the files that need to be stored.
• Using the same system, set up files for the paperwork you’ll need to file your current taxes.
• Set up a folder to collect all the W-2s, mortgage-interest info, etc., as they arrive.
• Once you’ve filed your return, place all of last year’s tax info into your permanent storage container and store in a secure, dry place.

Tip: Plastic flip-top boxes are sturdy and secure, and they accommodate a hanging-file system perfectly. For most, one box will store three to four years of paperwork. Here’s a good choice.

If you adopt this simple system and file your paperwork throughout the year, April 15 will be just another day.