Benjamin Franklin wrote, “In this world nothing can be said to be certain, except death and taxes.” Given those two choices, wouldn’t you rather discuss the IRS? Sure you would.
There’s nothing I can say that will make this fun or exciting, (as in, “Yay! I get to file my TAXES now!”) but I can offer suggestions to make the process a little less stressful.
Gathering the necessary documents should not feel like a scavenger hunt. Take action NOW to streamline the process once and for all.
You need a file folder. Label it: Current Year Tax Records. Voila! You’re done. Now, every time you get a donation receipt, a 1099-Div or a W-2, you have a place to put it. If your documentation is more than a standard folder can hold, get an accordion pleated one that expands to 3″ or 5″.
The same goes for documents you get electronically. Put them into an email file labeled, “Tax Documents” or if you use Gmail, slap a “Tax Documents” label on them and hit “archive” and they’ll be there waiting patiently when you need them.
If you get a blank receipt for items you give to charity, make note of what you donated while it’s fresh in your mind. I wouldn’t remember what I donated on August 3rd if I didn’t list it right away.
I’m sorry, but it really is this simple. Hey, don’t roll your eyes at me, I’m the voice of experience! I prepare a tax return for me and hubby, and that return includes income property. I also prepare returns for each of our grown kiddos as well as for my elderly mom. On top of that, I must gather the appropriate paperwork so my accountant can prepare my corporate tax return.
If this system didn’t work, I’d be running around like that proverbial chicken with its head cut off. Instead, all returns will be filed before the end of March.
If you have your taxes professionally done, don’t be that person every accountant hates to see coming with your over-stuffed shoe box full of random pieces of crinkled, crumpled papers. As an added bonus, eliminate that hot mess and it might reduce the preparation fees. Nothing warms an accountant’s heart like an organized pile of tax prep papers; as a former accountant, you can trust me on that.
Are you ready? April 18th is right around the corner and for most of us, that’s the deadline for filing our 2017 tax returns. There’s nothing I can say to make the process conceptually exciting (as in, “Yay! I get to file my TAXES now!”) but I can offer some suggestions to make the process a little less stressful.
If gathering the necessary documents felt like a scavenger hunt this year, take action NOW to streamline the process for next year.
You need a hanging file folder for each return you need to prepare. Label it: Current Year Tax Records. Voila! You’re done. Now, every time you get a donation receipt, a 1099-Div, or a W-2, you have a place to drop it. If your documentation is more than a standard folder can hold, get an accordion pleated one that expands to 3″ or 5″.
The same goes for documents you get electronically. Put them into an email file labeled, “Tax Documents” or if you use Gmail, slap a “Tax Documents” label on them and hit “archive” and they’ll be there waiting patiently when you need them.
If you get a blank donation receipt for items you drop off at a local site, make note of what you donated while it’s fresh in your mind. I would never remember what I got rid of a year ago on August 3rd if I didn’t list it right away.
I’m sorry, but yes, it really is this simple. Hey, don’t roll your eyes at me, I’m the voice of experience! I prepare a tax return for me and hubby, and that return includes income property. I also prepare returns for each of our grown kiddos as well as for my elderly mom. On top of that, I must gather the appropriate paperwork for the accountant to prepare my corporate tax return.
If this system didn’t work, I’d be running around like that proverbial chicken with its head cut off. Instead, all returns were filed by the middle of March.
It doesn’t matter if you do your own taxes or have them done for you. However, if you use a professional, don’t be that person every accountant hates to see coming with your over-stuffed shoe box full of random bits of scrumpled papers. Eliminate that hot mess and you might save money on preparation fees, too!
I work with many clients setting up filing systems and sorting through years and years (and YEARS!) of accumulated papers. The question I’m asked most often is, “How long should I keep paper stuff?”
As a former accountant, I’m comfortable answering. I add this disclaimer, however: when in doubt, seek advice from your tax preparer or financial advisor.
I recommend shredding documents you get rid of in these common categories:
Utility bills: Unless you take a home office deduction, there is no reason on God’s green earth to keep these. You can access your history online. I’ve automated utility bills so I get ZERO in the mail. The only papers in my “utility bills” folder is a bill from each provider with our account number and their emergency contact information.
Bank statements & credit card statements: In theory, you get your statements, you reconcile their numbers with yours and… that’s it. You don’t need to keep the statements. Pull copies of tax-related cancelled checks and pop them in your “tax return info” folder.
Investment statements: It helps to understand why you keep the ones you keep so you can better understand why it’s ok to get rid of the rest.
Certain investment data is necessary for preparing a tax return. BUT. You only need the annual statement that summarizes investments you bought or sold, interest and dividends you earned, along with details of any contributions or withdrawals to/from IRA accounts that are reportable on your tax return.
Therefore, you can shred monthly or quarterly statements from investment accounts when the new ones arrive.
Keep statements that show purchase details until you sell an investment; you’ll need purchase cost and sale price to calculate a capital gain or loss on your taxes. If your investments have been with the same firm, they’ll have that historical data. If you change firms, give them purchase information for any investments you’re transferring so they have it for future reference.
If the concept of shredding any of these on a monthly basis is too far outside your comfort zone, try keeping one year’s worth and then shred.
Consider signing up for electronic statements for any of the categories I’ve mentioned. (resist the temptation to print or you’re right back where you started!) You can still file e-statements in an electronic folder, but it significantly cuts down on the daily flow of paper into your life, and who wouldn’t love that?
Whether it’s a four-day pile of unopened mail or years of accumulated papers, there comes a point when tackling it becomes daunting.
Maybe it’s the hall closet filled with linens you no longer use. Perhaps the spare bed is overflowing with unworn clothes and you can’t muster the energy to separate what fits and is flattering from what’s outdated or no longer appropriate for your lifestyle.
Here’s the thing. The longer you wait for the perfect time or enough time to tackle the entire clutter project, the longer it’s going to build and build and nothing will get done and trust me when I tell you: clutter’s negative energy can affect you mentally, emotionally and physically. It can damage relationships, sometimes tearing families apart.
Fear not; I bring you tidings of great joy – well maybe not of great joy, but of hope. No matter how big your clutter issue is, it is not hopeless.
Stop looking at the big intimidating clutter picture and start breaking it down into manageable bits. Clutter’s ability to overwhelm diminishes when you chip away and begin to see progress. Remember that fable of the tortoise and the hare? Slow and steady can win the race.
Instead of thinking, “I need ten hours to open and process the mail,” try this: “Each day I will open and process today’s mail PLUS ten pieces from the backlog piles.”
If there are papers everywhere, gather ‘em up. Fill a bin or two or ten. Start sorting into broad categories: Shred/Recycle/Toss/File/Pay/To Do and dig in. Put on some music that will calm or energize you and focus for a set period of time. Make it a game: see how much you can accomplish in 15 minutes and do a little more tomorrow. Instead of just watching a sitcom, use that as a timer and sort a bin of papers. TV AND progress – win-win!
Don’t focus on the roomful of clothing. Get up 15 minutes early and try on three items in the pile. Decide if you want to keep, sell or donate, then move on with your day. Wash, rinse, repeat.
If it’s a hodgepodge of clutter, pick something and gather “like with like” – all wrapping paper, all books, all seasonal decor, all garbage – whatever it is, gather it up and attack the room one “thing” at a time. Where should those books live? You can’t put something away if it doesn’t have a home…
Ok, that’s a blog post for another day so I’ll leave you with this “What About Bob” movie clip that I reference with clients all the time:
Here’s an idea: before you file something away, ask yourself, “Why am I filing this? Do I actually need to keep it for anything?” If the answer is no, work on breaking that habit. It’ll save you time, and it’ll save space in the file cabinet. One good example for many folks is utility bills. Everyone files them, but nobody knows why.
When I present an organizing seminar, I ask folks in the audience, “How many of you file your utility bills after you’ve paid them?” and invariably, hands shoot up all over the room. When I ask them, “Why?” I am routinely met with a roomful of shrugs and quizzical looks.
Sometimes we do things out of habit without re-examining the reason, and the reason for keeping certain papers in our file drawers may be overdue for review.
Perhaps you keep utility bills because you take a home office deduction on your income taxes. However, you can see an on-line history of utility bills paid, so again, why keep the monthly statements?
I stopped getting utility bills, bank and investment statements, and car loan statements in the mail and instead, receive them all online. I reconcile my accounts and pay my bills online, too, so there’s no need for me to print these statements.
If that’s too far out of your comfort zone, how about keeping one year’s worth and shredding with the start of a new year?
When your year-end investment account statement arrives, it has all the information for the year and you no longer need the monthly or quarterly statements, right?
Once you see the transactions on your bank statement, you can shred ATM slips and deposit receipts.
At the end of the year when you get your W-2, you can shred your paystubs.
We are inundated with an onslaught of papers on a daily basis. If we reduce the quantity of what we get and what we file by eliminating things we’re keeping out of habit rather than actual need, it’s another small step towards organizing and simplifying our daily lives.
Sometimes I read tips by the upper echelon of organizers (you know, the ones Oprah made famous, or who’ve written best-selling books) and I think, “Hmm. That doesn’t seem very practical to me.”
Just because “So-And-So” says it’s a great idea doesn’t automatically make it the right solution for you. There are no cookie-cutter answers – at least there shouldn’t be. What works for one person might not work for another, and a good organizer should be able to help figure out a solution for you based on your needs, your style, and your stuff.
A recent tip in an online newsletter suggested this way for dealing with receipts:
To organize receipts, a simple, low-tech solution is to use two bankers’ spikes. Get in the habit of cleaning receipts out of your wallet or purse daily. Place receipts on one of the spikes as they come in. When one spike is full, start the other. If you haven’t needed any of the receipts by the time you fill up the second spike, throw out everything on the first spike.
First of all, I would never recommend banker’s spikes in a household with small children or pets. Those things could be lethal in the wrong hands!
Secondly, not all receipts are created equal. Receipts for consumables that cannot be returned? I get rid of them once I’ve verified that the right amount showed up on my credit card. It’s not like I can return the gas I put in my tank or get a refund on the pizza from last month, right? BUT. What about the receipt for patio furniture that has a 10-year warranty? Just because I might not need it by the time the second spike is full doesn’t mean that I won’t need it three years from now if a leg falls off my table.
Do you want to rifle through all your receipts when reconciling one credit card statement – you do reconcile your credit card statement, don’t you? – or would it be helpful to separate them by each credit or debit card used?
I’m also not a big fan of this oft-repeated tip about kitchen utensils:
Not sure what you use and what you don’t in your kitchen? Here is a tried and true way to find out. Empty the contents of your kitchen utensils drawer into a cardboard box. For one month, put a utensil back into the drawer only if you take it out of the box to use it. If it’s still in the box after four weeks—you don’t need it. Pass it on to charity.
What about my turkey baster? Or the whisk I use for hollandaise sauce? I don’t use those things monthly or even quarterly – but I use them. I think a more practical way to thin down your utensil drawer is to sort “like with like.” Once you realize that you have seven spatulas, you might decide that you can whittle it down to four. If you’re an avid baker, you may need more measuring spoon sets than I do – one set is plenty for me.
Go ahead and read those tips, but if they don’t seem logical or practical, no matter who’s offering the advice, maybe “Because I said so…” isn’t a good enough reason to incorporate it into your daily routine.
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Are you ready? April 18th is right around the corner and for most of us, that’s the deadline for filing our 2017 tax returns. There’s nothing I can say to make the process conceptually exciting (as in, “Yay! I get to file my TAXES now!”) but I can offer some suggestions to make the process a little less stressful.
