Organizing and Maintaining Tax Documentation

Jul 14, 2017 | By: Julie LeGrand

Get Organized and Maintain Your Tax Info After You've Filed:

Basic Organizing

If your return is relatively simple and your documentation consists of a few W-2s and investment statements, a simple manila envelope might work fine for keeping your papers in order. If you own your own business, have rental income, itemize deductions, or have any number of other matters that complicate your tax return, more organization will be required.

There are countless ways you can organize your tax documentation and there is no specific right way! Find or create a system that works for you and that you can stick with. An internet search will turn up dozens of ideas. Here are a few articles to get you started:

How to Organize your Taxes

Create Personal Tax Organizer System

Using a filing system to keep receipts and other documents sorted by income, deductions, and bank statements may work for you. Others may prefer to get more detailed or go digital.

The key here is to not leave the collecting and organizing of documents until the night before your appointment with your accountant. Keeping up your chosen system throughout the year will help decrease the headache of tax season. If you are unsure as to what documentation you should be keeping for your taxes, give our office a call.

How Long to Keep Documentation

As a rule of thumb, you should keep your tax return and all supporting documentation for three years after filing. This is the period of limitation in which you can amend your return or the IRS can audit your return. When selling property like stocks, bonds, or your home, hold on to your returns until three years after you sell the property. For more tips on when to toss those old tax returns, check out this Forbes article.

Digitization

Reading about needing to keep and organize your tax documentation for not months but years may leave you feeling heavy with the weight of all of this documentation. You begin to see visions of the mountains of paperwork as you gulp and think of the storage unit you will have to rent for all this!

While keeping physical copies of all of your tax returns and supporting documents is a valid option, in the digital age it is certainly not the only one. The IRS allows you to maintain your records via an electronic storage system. The main requirement is that the documents are still legible after digitization.

If making the leap to digital records is intimidating, you might start out by digitizing one or two aspects of your return. For example try going paperless with your bank statements. Regardless of whether you keep your tax returns and supporting documentation in paper or digital format, be sure to store them in a secure location! Check out this article for more information about cloud storage and options for secure data storage.

Give Johnson Glaze a call today if you need help or have questions regarding your tax documentation. 503-390-7880