As we mentioned last week, tax time is just over two months away. As a matter of fact, you may be carving out a (potentially) annoying chunk of time this weekend to sit down with your box of receipts to prepare for your meeting with your bookkeeper or CPA. But that box of receipts is a real hinderance-not only is it messy & unorganized, it can cost you time spent sorting through the mess as well as money lost to your bookkeeper, CPA, and potentially with money owed to the government if you’re missing possible deductions.

Disorganization has a price tag, and that’s proof. But with a minimal amount of time & a brief trip to your local office supply store, you can prevent losing what’s most valuable to you. Smead’s Audrey Thomas recently wrote about how to best set yourself up for tax time moving forward:

Our First Piece Of Tax Advice Is To Create A System To Sort Income, Expenses And Taxes.

Throughout the year you will come across paper documents supporting important information for your tax returns. Sort this information into three categories, using separate hanging files or binders. If you like uniformity, stick with one color for your files or binders. If you are more visual, you might prefer a separate color for each category:

  1. Income: Here is where you’ll keep payroll stubs, 1099’s, Dividend Distribution statements, Gain & Loss statements and Annual statements from your financial institutions.
  2. Expenses: Receipts of deductible items such as donations, loan interest statements, school/tuition expenses, business expenses such as mileage or uniforms. For real estate transactions, you’ll need the closing statement and any home improvement receipts in case those are deductible.
  3. Taxes: If you pay any kind of taxes throughout the year (I.e. quarterly, estimated) keep these receipts in your Taxes File or Binder.

Valuable Tax Advice on Receipts

If you purchase items that you’ll need proof of when tax time comes, you’ll want to be sure to hang on to the receipt. Sometimes it may not be convenient to file the receipt immediately.

  • Keep an expandable wallet in your vehicle or kitchen. These are two locations where receipts are often found “floating”. Once a month, transfer the receipts into your Expense File or Binder.
  • If possible, make a note on each receipt what was purchased and circle/highlight the date. When you’re in the middle of preparing your taxes, you’ll appreciate this attention to detail.

So if you’re looking at your box of receipts in frustration this weekend, heed the tips above and get organized now to make preparing your taxes in 2017 just a little more tolerable!