Q:

How do you use a tax organizer?

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Quick Answer

Use a tax organizer to save documentation about income and deductions, to ensure your taxes are accurately filed, recommends Home Storage Solutions. The site recommends that you create multiple filing systems to store minor and major receipts and other documentation necessary to complete taxes. Label and organize the documents into sections such as medical documents, child care costs, business deductions and student loan payments. Consider using a receipt scanner if you have many receipts.

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Full Answer

Home Storage Solutions suggests creating different categories for different receipts collected throughout the year. This includes receipts for minor purchases that need referencing no later than two months after purchase. Major purchase receipts include ones kept to facilitate filing insurance claims or warranties, as needed. Retain receipts for property and vehicles as part of the tax organization process, as well as any receipts that provide evidence for deductions for upcoming tax returns.

Keep these different receipts in an expandable folder with the different categories of receipts labeled appropriately, states Home Storage Solutions. Other categories should include income information and any evidence needed for particular tax deductions or credits. Label the outside of the expandable folder with the tax year, add the documentation, use it to help file taxes, and then hold on to the information as long as possible. It may be needed for future tax purposes.

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