You’ve submitted your tax return for the year, so now what do you do? Instead of shoving all your records into a disheveled pile in a closet, now is a good time to get organized. Here are some tips on organizing tax records after you file to make sure you’re ahead of the game next year.
File Away Your Tax Return and All Related Records
Once you’ve filed your return, it’s a good idea to create a single location to keep all the information related to the tax year for which you just submitted. If you keep physical records, this means printing off your return, including all additional schedules, and sticking everything in a file, along with all the forms you received that reported income, expenses, or other tax-related information. These are forms like the 1099 MISC, W-2, 1099 INT, etc.
It’s also a good idea to include receipts for purchased items you’ve claimed as deductions and other records you’ve used for filing your taxes, such as accounting reports and mileage records. Then if by chance the IRS chooses to audit your tax return, you won’t have to scramble to find all the records you need to prove why you claimed these deductions and credits.
Get Organized for Next Year
There’s no better time for organizing tax records than right now. Since you just filed your taxes, you’re aware of what was hard about the process and what parts of filing you can streamline. This may mean creating a physical file or a file on your computer where you can store receipts as they come in. Since more and more receipts arrive via email, you may want to create a separate receipts folder in your email account so they’re easy to find.
If you think you’ll be able to claim new deductions or credits next year, now is the time to start gathering the information to do so. If you expect to lose a credit or deduction you claimed last year (for example, you or one of your dependents is no longer in school, so you can’t claim the higher education tax credit), you can start considering other ways you can lower your tax burden to compensate. This may mean contributing more to your retirement plan or donating to charity. Being proactive makes it a lot easier to find everything you need when you’re ready to file your taxes next year.
If you think you may be able to itemize your deductions, consider keeping all your receipts. When you itemize deductions, you can deduct the amount of sales tax you paid on goods throughout the year. Although the IRS provides a sales tax calculator that calculates a standard tax deduction based on your income and ZIP code, you may have spent more than the standard, especially if you made a large purchase — like buying a car or building a house — and paid sales tax on the supplies.
If you create a spreadsheet where you can enter the amount of sales tax on everything you’ve bought, it will ultimately save you a lot of time during tax season. This way, you’ll know whether you spent more than the standard tax deduction you’re eligible for.
Consider Storing Your Records Online
If you prefer to keep the amount of paperwork you acquire to a minimum, you can choose to store all your current and past tax information on your computer or — even better — online using a cloud service. If you do store it on your computer, be sure you make regular backups. If you subscribe to a cloud service, the information you store on your computer will be automatically backed up anytime you’re connected to the Internet, ensuring you never lose those records. If you have paper records, you can scan them and upload them onto your computer so you can store everything in one convenient location.
By getting organized now, you can save yourself a lot of time and more than a few headaches when the next tax season comes around. These tips on organizing tax records after you file will make the process a whole lot easier.
For more information on all things taxes, contact Liberty Tax® directly at 1-877-at-Liberty, or visit a conveniently located Liberty Tax® office near you. For real-time updates, follow Liberty Tax® on Facebook and Twitter.