Monday is tax day! While we're just about to put 2015 taxes officially behind us, it's not too early to start preparing for your 2016 taxes! Having organized files can do wonders when it comes to making tax time easy. If you struggle to find all your donation acknowledgements or HSA receipts before you can file, don't wait until the end of the year to gather these documents. Grab a few file folders and go ahead and get started now for 2016!
- Create a folder titled "Taxes - 2016." This is where all your tax files from this year will be stored AFTER you file. You need to keep this folder for 7 years in case of an audit. Throughout the year, you'll gather your tax documents in the categorized, labeled folders below. After you've filed, each of the category folders can be consolidated and put in your 2016 tax folder with your return.
- Create a folder titled "Taxes - Income." Gather the current year's W2's, 1099's, rental property income statements, and miscellaneous income information here.
- Create a folder titled "Taxes - Pay Stubs". Check these against your W2 at the end of the year and then shred them.
- Create a folder titled "Taxes - Deductions." Gather documents regarding deductions like student loan interest, IRA contributions, qualifying energy-efficient home improvements, mortgage interest, child care costs, home office deductions, etc. for the current year here.
- Create a folder titled "Taxes - Medical Receipts." Gather any and all medical receipts in this folder throughout the year. This is especially important if you have a FSA, MSA, or HSA or if you think you'll have enough medical expenses to write them off on your taxes.
- Create a folder titled "Taxes - Charitable Donations." This folder will house any receipts from Goodwill, non-profit donations, etc.
- If you own a business, make folders for your 2016 business income and expenses. If you haven't already, start tracking your business mileage so you can write it off.
This should get you started in an organized way so that when you file your 2016 taxes, your backup documentation is already ready to go! Happy tax day!