Organizing Tax Archives

This time of year, many of us are busy gathering required documents to prepare our tax returns. Once completed, the return and its supporting documentation need to be kept for seven years. Seven years’ worth of tax returns and documentation can take up a lot of space in your home office. Here are some tips on the most effective ways to organize and store your tax archives:

Use Hanging Files – I always prefer hanging files over manila folders, because they stay upright and protect your files, slide effortlessly for quick access, and are easy to label. Manila folders can be a great addition to your hanging files if you need to sub-divide the contents.

Create One File Per Year – The average household shouldn’t need more than one folder for each archived tax year. If you have your tax categories (donations, wages, etc.) already broken out into separate folders during the tax year, you can transfer them to manila folders to preserve the categories. If your file is getting too crammed, you can purchase box-bottom files, which are shaped more like a “U” than a “V”. You can get them in different widths including 1”, 2”, 3” and 4”. By keeping everything for a given tax year together in one folder, it makes it easy to find what you need. Often times, people only go back to their tax archives in the event of an audit. If you are audited, it is much less stressful when everything you need is all in one place.

Store Out of the Way – Don’t store your tax archives in your “prime real estate”. What I mean by that is store these files out of the way somewhere. It could be in the least accessible file drawer in your office, or maybe even outside of your office. I keep mine in a portable file box on a shelf in the basement. This way I am not using my valuable space for files I access infrequently.

Follow these tips to make tax time more organized and less stressful.

-Donna Lindley, Certified Professional Organizer and owner of Rochester Hills, MI-based Organize Your World, Inc.

What do you do during tax season to help you stay organized?
To check out more tax organizing ideas, visit Organize-It!