It is never too early to start organizing for tax time. If you have a desk, box or simply a folder full of receipts and tax forms, you can develop easy organizational practices or habits to make your life easier and to help your accountant when you actually go to file.
Here are some simple ways to get organized for this year's filing and stay organized in the future.
- Use one card – If you are going to use a debit or credit card for payment, use the same one for all tax-deductible purchases. Also, choose a card that allows you to group or categorize purchases, so you can easily print the list and have an easy-to-use record for the accountant. Try also to keep the actual receipts as well; they can be placed in an envelope and kept if necessary for records.
- Scan receipts – If you don't like the idea of keeping all your receipts, you can run them through the scanner and keep them in files on your computer. This eliminates the problem of receipt ink fading, but you will still need a backup copy in case of a computer crash.
- Avoid using cash – Cash makes things more difficult as there is complete reliance on one receipt rather than a record through a statement or other type of document. If you are using cash, be sure to scan and save receipts that are itemized.
- Set up a file system – An accordion or expanding folder or a set of large manila envelopes that are labeled as to the types of receipts included is a simple and easy filing system for the hard copy receipts. There are lots of low-cost and free software options and apps that will allow you to organize your receipts electronically; some even have the ability to allow you to take an image of the receipt with a smartphone and post it for all data entry.
- Deal with receipts or purchases daily – Avoid putting everything off until the end of the week or the month. Instead, file all receipts on a daily basis which will avoid mistakes and omissions in what you can claim.
Your accountant may also be able to recommend the software, apps, and options that she or he finds to be most efficient for other clients, and that is a great resource to use.