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This year's tax season is nearly over, and you probably have already filed your taxes, so you have a few minutes to take a deep breath and relax. Don't relax for too long though. If you do a few simple organizational techniques now, you can save yourself a lot of headaches next year when tax season rolls around. Every year tax season rolls around and millions of Americans begin rifling through unmarked receipts, canceled checks, pay stubs and any other little scrap of paper that might have made its way into the shoe box under the bed. You may have to make frantic phone calls to the daycare to get their tax identification number or lose out on a deduction because the receipt you have been staring at for an hour doesn't have the store's name and items purchased listed on it. The key to eliminating all the confusion next year, is organization. Many of us start out with the best intentions, but we just fall behind because as the year wears on we forget last year's tax headaches. You may not believe it, but doing your taxes will never be fun but it can be easier. The first thing to do is find a box or area that can be designated for tax information. The white, cardboard filing boxes are great for this purpose. They cost about $6 for a pack of three. The reason they come in so handy is you will have to keep your tax information for three years at least and it is recommend to hang on to it for seven years. On the side of the box, write the tax year. For example, when beginning to organize for next year's taxes, write tax year 2005 on the box. When tax season rolls around, you have everything in one place and it's already prepared for storage. Having the box isn't going to help if you just throw everything including your old shoes in the box. It is always best when buying tax deductible items to use a check or credit card for the purchase. When you use a check or credit card, you have a permanent receipt of the purchase-your statement or canceled check. These days we have the check card which makes purchasing things so much easier and forever puts a record on your bank statement. Each time you get your statement, highlight the tax deductible purchases mark next to the highlight what the purchase is for (for example write oil change next to the item), and file it away in a manila folder in the box. It only takes two extra seconds to highlight each month and it really saves time at the end of the year. If you are saving receipts, and you should be, write what the purchase is on the receipt. Sounds complicated? It doesn't have to be. You are not trying to create an award winning presentation-you just want a record. Each time you check out at the store, write on the receipt they hand you. You already have the pen in your hand or one is nearby. For example, if you are a fitness instructor and you just bought some new workout clothes, write gym clothes on the receipt. Now when you go back to look the receipt, you can figure out what "pt XL" means-pants, size extra large. You have to commit to taking five extra minutes each time you pay your bills because that is all it takes. Staple any receipts that match up with your statement to the statement. File it in your receipt folder. Take any cash receipts and mark them and file them as well. If receipts constantly get misplaced after shopping trips, put an envelope in your purse or a paper clip in your wallet and stick all receipts in there until you get home or until the next time you sit down to pay your bills. If you are deducting the cost of a car, you need to keep all your maintenance receipts as well as a log of your mileage. Ugh. Most people keeping mileage logs. It can be easy. If you use a handheld computer such as a PDA or a laptop, they make an accessory that can be attached to your dashboard. This accessory can hold your cell phone, PDA and many other electronic devices. You can simply keep a log of your mileage in the equipment. They also make dash notebooks that are designed to attach to the dashboard of your car and are specifically formatted to help you keep track of your mileage. If you don't want to spend too much money, there's another option. In the children's section of your local super store, there are notebooks with strings attached to them that are meant to be worn around the neck. Take one of these notebooks and hang it from your rearview mirror. Tie a piece of string around a pen and tie the pen to the notebook. Jot down the mileage when you get in and out. You can have cryptic messages to yourself. Remember only you are going to be looking at this and possibly an auditor if you get audited, but, trust me, they have seen worse. You should also keep a file in the box for your pay stubs, medical receipts (including your co-pay), and your mortgage statement to keep track of any interest paid. At the end of the year it will all be there. When the time comes (that means January 1), you only need to take about 30 minutes of preparation. If you are super organized, and most of us aren't, you can do the preparation as the year goes by. Simply sit down look through your already highlighted and noted receipts and add them together in categories. If you have been highlighting and writing on your statement, you should only have to look at each highlight and add. When you put your pencil down next year, you should feel good and a lot better about the organization you kept this year. Remember, it doesn't have to be perfect organization. You don't need hundreds of separate folders. If you keep everything together and write what it is on the receipt, you will have a much easier time. Anyway you look at it, the tax man cometh, and you can be prepared without a last minute scramble. __________________________________ By Heather Wellman
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