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  • Writer's pictureRafael Burgos

How To Organize Your Tax Documents

Updated: May 8, 2022

Whether you're a small business owner, self-employed, or work for someone else, organizing your tax documents and receipts is essential. Not only will this help you track and verify each expense, but it will also help you justify your deductions if necessary. When working with a CPA in Orlando, we will utilize these documents to get you the best refund possible. Use these tips to get organized and make tax preparation easy:

Which Documents Should You Keep?

The best way to keep your receipts and expenses in order is to check in regularly. This allows you to easily find the proper documentation when needed. These documents include:

  • Income: Pay stubs, W-2s, 1099s, interest statements, dividend statements, and any jury duty payments.

  • Medical expenses: Receipts from doctor visits, medication, out-of-pocket expenses, and health, dental, and vision insurance premiums.

  • Charitable donations: Receipts for cash and itemized donations.

  • Real estate: Mortgage interest statements, homeowner’s insurance receipts, home improvement receipts, and other paperwork associated with casualty losses to your home.

  • Property: Receipts for taxes on cars, additional vehicles, and any other big-ticket items.

  • Childcare: Receipts for payments to daycare or sitters.

  • Student loans: Documentation for payments made and interest charged.

  • Self-employment: Some self-employment expenses include advertising, office supplies, employee pay, business-related meals and entertainment, business fees, travel, and contributions to SEP-IRAs, SIMPLE IRAs, and solo 401(k)s. Your accountant will be able to help with a full list of potential expenses.

  • Utilities: If you qualify for a home-office deduction, you’ll need your utility bills to calculate the amount deductible from your taxes.

Designate An Easily Accessible Place For Your Documents

If you plan to sort your documents digitally, create a folder on your computer for the tax year you are organizing for (i.e., 2022 Tax Documents) and create subsequent folders for the category of documents you are organizing (i.e., Real-estate expenses).

If you plan to sort your documents physically, keep them in an easy to remember and easy to get to place. Consider choosing somewhere you can reach with one hand, like a shelf or folder, even while holding a stack of mail.

Document Your Expenses On The Go

If the idea of sorting individual receipts, paperwork, and documentation sounds complicated, you can try tracking your day-to-day expenses on the go. Take pictures of your receipts as soon as you get them as a form of digital documentation, then refer to them when you have your monthly check-in. There are also budgeting apps like Mint that allow you to organize and store photo receipts.

Group All Documents By Category

The best way to organize your documents is to have them grouped by category. For those who choose to organize their documents physically, we suggest an individual manila folder for each category. If you choose to digitally organize your documents, we suggest creating an individual folder for each category. If you have one or more businesses, you’ll need to keep each business’ information separate as well.

Create a Checklist for Your Documents

When planning to itemize your deductions, a good rule of thumb is to create a checklist of questions or tasks that are relevant to the information being sorted. These checklists can include what you need to do if you open a new account, if you need a specific form, if you can disregard a form that is no longer needed, etc. This will help you to avoid missing necessary paperwork or information and makes tax prep and processing easier.

Contact An Experienced Orlando Accountant Today

It’s never too late or too early to get your tax-related documents organized. Aside from being necessary if the Internal Revenue Service (IRS) ever audits you or questions your return, this information can be useful in the future.

When you work with Burgos CPA Services, you can be confident your taxes will be done right. From small business owners to self-employed freelancers, we are ready to assist with your situation. Schedule a free consultation to learn how we can help you: Click Here

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