Organizing Taxes

I started a very simple system for storing my taxes last year, but I didn't finish it until this year. Well it was finished, but it wasn't pretty. Do taxes need to be pretty? No, but it makes paying them just a wee bit happier. Anyway, I thought I'd share how I have them organized.

I purchased an expanding file folder with 6 dividers inside (I think at Target, but I couldn't find it online) with an elastic strap that goes around the entire folder.

I also purchased a poly envelope, which I labeled with the current year.

I had some pretty file folders I wasn't using, so I labeled them with the last seven years.

I slipped each file folder into its own slot in the expanding folder, and I slipped the poly envelope underneath the elastic that goes around the back of the expanding folder.

When a new year rolls around I can shred the documents in the oldest year's folder and relabel it with the latest year. The poly envelope I use to wrangle all the documents I will need for the next years taxes. Things I store in the envelope include: our W-2s once we receive them, donation receipts, property tax information, banking interest information, car registration information, etc. Pretty much anything that is deductible that I might use when filing next year's taxes goes in that envelope. I don't organize things within the envelope, because I generally don't collect that many things to put in there and I haven't found it to be a problem. I really love having one place to put everything I will need for next year and knowing where to look if I need to access it.

I have seen more complicated tax organizational systems that work well for people who have more paperwork and receipts by the end of the year, but this simple system works really well for us. Everything stays together and I like being able to easily add items throughout the year in the envelope.  It's super easy to maintain.

Next step will be to scan the past years documents and save them on my computer. I'll still retain the paper copies, but I think it will be nice to have a digital copy as well.