--From the Tax Lounge archives
It’s rumored that the average lifespan of a New Year’s resolution is two months – HA! Try two glasses of wine for some of us. Anyhow, for those of you who resolved to get organized this year, here is the hope that it will pay off. Better yet, here is a tip to help it pay off at tax time: Create a tax binder.
It’s no secret that
organized tax records may help you yield a higher refund or a lower tax bill.
Being able to find every receipt and keeping precise records ensures you have
the proof needed to file your taxes accurately. Organizing documents in a
binder or folder will make it easy for you and your tax preparer come tax time. Hopefully it will prevent you from missing any
credits or deductions.
Here’s a rough
outline of sections for your tax binder:
Receipts. If your receipts
are abundant (currently fill a shoebox), you may want a separate folder using
the months as dividers and a plastic pocket for each. If you can afford a
receipt scanner, that’s the obvious choice. Examples of receipts you may want
to keep are: energy saving appliances, work-related magazine subscriptions,
office supplies, job-required uniforms, educational courses for work, etc.
Medical Records. With a Flexible
Spending Account, it’s a necessity to keep track of your medical and dental
expenses. It’s easy to keep everything together when a medical question arises.
Having your medical records and expenses in the tax binder makes preparation
easy come tax time.
Mileage. Keep a mileage
sheet for medical trips and any miles you drive for medical, business and even
volunteering. For 2014, the rate was 56 cents per mile for business purposes;
23.5 cents per mile for medical or moving purposes; and 14 cents per mile while
volunteering for charitable organizations. For 2015, the rates are 57.5 cents
per mile for business; 23 cents per mile for medical or moving; and 14 cents
per mile for volunteering for charity. You can find a free
printable for your mileage log here.
State tax forms. Personal property
taxes go in this section along with any additional tax forms the state sends at
the end of the year.
Federal forms. W-2s and 1099s,
1098s, all would go here, and any other tax forms that trickle in through the
You should keep tax
documents for at least three years, and if you’re self-employed or have various
sources of income keep them at least six years.
Having this binder
will make your tax preparer jump for joy. And
make your life during tax time a lot easier.
Updated on January 9, 2015
Disclaimer: Every effort has been
taken to provide the most accurate and honest analysis of the tax information
provided in this blog. Please use your discretion before making any decisions
based on the information provided. This blog is not intended to be a substitute
for seeking professional tax advice based on your individual needs.