Expert Tips for Organizing Your Documents for Tax Season

As tax preparers, we know just how exhaustive the list of necessary tax documents can be. Depending on your tax situation, you may find yourself trying to assemble and organize hundreds or even thousands of different pieces of paperwork before you can even begin to file. If you’ve found yourself stressed over organizing your tax documents in the past, here are a few expert tips to help you be organized (and less stressed) this year.

Know What You’re Waiting For

Many taxpayers often find themselves waiting for necessary tax forms from employers, clients, or other income sources before they can file. And, oftentimes, they may begin to file their return, only to realize that they’re actually missing a form or two. While you’re waiting for those tax forms to come in the mail, make a list of all of your sources of income, which form you should be receiving for it, and who it’s coming from. This way, you’ll know exactly what you’re waiting for and who should be sending it to you; and, you’ll know the moment you’ve gotten all of the necessary income tax documents.

The exact income tax forms you need will vary based on your sources of income, which is why it’s important for you to make note of every income source. This doesn’t just refer to work-related income, but to any dividends and interest you earned, profits from stocks you sold, and so on. Here’s a quick look at some of the more common types of income tax forms and what they’re for:

  • W-2: This is the most common income tax form and is given to anyone earning a wage or salary from an employer.
  • 1099-Misc: This form is for any freelance work you performed. You should receive one from each client.
  • 1099-G: You should receive this form if you receive unemployment benefits during the year.
  • 1099-Div: This form shows income from any dividends and interest.
  • 1099-R: If you receive income from a pension, annuity, or IRA, you’ll need one of these.

If you’re unsure what forms you need, speak to your Provo tax preparer about your income sources. We can tell you what forms you should be receiving.

Go Over Your Deductions

While you’re waiting on those income tax forms, you can start going over your deductions. If you’re not taking a standard deduction, you’ll need to have documentation supporting all of your itemized deductions. Again, the deductions claimed will vary from person to person. Here’s a list of some common deductions and the documents you might need to claim them:

  • Rental property maintenance and management: You’ll need receipts and bank or credit card statements to prove these expenses and deduct them from your rental income.
  • Business expenses: If you’re self-employed, you likely have a long list of business expenses. Be sure to have receipts and statements proving these costs to deduct them.
  • Charitable contributions: You can deduct not only cash contributions but the donation of non-cash items as well. Just make sure you have a receipt from the charity; if you don’t, you should have a detailed personal accounting of what you donated, when it was donated, and the worth of the items.
  • Retirement account contributions: If you contributed to a qualifying retirement account, make sure you have copies of those accounts’ statements to deduct it on your return.

This list is by no means comprehensive. Speak to one of our tax preparers about what other deductions you may qualify for. Once you know what you qualify to deduct, begin gathering those receipts and statements and organizing them so that you’re not searching for the paperwork when it’s time to file.

Don’t Just Use One File

Many taxpayers tend to just stick every tax-related document—whether it’s an income tax form, receipt, or bank statement—into a single folder marked with “Taxes” and the tax year. While this is certainly better than nothing, it does still leave you (or your tax preparer) sorting through a large pile of documents when trying to file. Rather than having to dig through your receipts to find an income tax form, use subfolders to better organize your documents.

The exact folders you’ll need will depend on the documents you have, but here are some suggestions of subfolders you might include:

  • Income Tax Forms
  • Rental Property Expenses
  • Charitable Contributions
  • Business Deductions
  • Medical Expenses
  • Retirement Accounts

Put a Spreadsheet before Your Receipts

In each of the expense folders mentioned above, place a spreadsheet at the front of the folder that shows all of the expenses or contributions that you made throughout the year, with a total at the bottom. This gives you the most essential information—the numbers you’ll be putting on your tax return—upfront so that it’s easy to find when you’re ready to file. Place all supporting documentation behind this so that you can easily access it if necessary.

Digitize Your Documents

Finally, we recommend that you file your documents digitally in a secure folder. You can still organize your paperwork in the same manner described above. However, doing it digitally protects your documents from accidental loss (How easy is it to lose a receipt?) as well as disasters like house fires or flooding.

At Biesinger & Kofford CPAs, we provide our clients with a secure, encrypted client portal that not only allows you to upload and store your tax documents, but also makes it accessible to your tax preparer right away. So, the moment your tax documents are uploaded to the portal, your tax preparer can begin working on your return.

By beginning to organize your tax documents now, you’ll be able to file your tax return more quickly and easily. If you have any questions about your tax forms or filing your return, speak to a Provo tax preparer at Biesinger & Kofford CPAs today.