Organizing tax records and receipts is a necessary evil that some people do better than others. But if you think of keeping records as saving money rather than something boring to do, you'll be more motivated to keep track of various pieces of paper.
Let's take a brief look at the records we need to keep and how to organize them.
Most people have four questions about keeping records:
Let's start with tax records and documents. You want to keep documents to check that your employer doesn't report more income than you actually earned and that you get total credit for retirement, Social Security and Medicare contributions -- especially if you work for more than one employer and may be paying more than required. You want to reduce your taxable income by every legitimate deduction that you can prove.
Keep your wage statements until you receive your W-2 form from your employer in January. Make sure your salary information reported to the IRS is correct. You may want to keep track of the amount deducted for retirement contributions and for Social Security and Medicare contributions. When you are satisfied that your employer's records match your record, you can throw these statements away.
If you use the standard deduction, you can reduce your tax by keeping track of expenses that qualify to reduce your taxable income -- for example, educator expenses, IRA deductions and moving expenses. Go to http://www.irs.ustreas.gov/ and look at the 1040 Form for deductible expenses and tax credits.
If you itemize deductions rather than taking the standard deduction, you'll need to keep track of more documents.
The easiest way to keep all of your papers is in a shoebox, then sort through them early in the year as you prepare your taxes. A better way is to use a simple tracking system. Identify the categories that fit your situation and label a separate, lined page for each type of expense, such as "child-care expenses." Write the following headings across the page:
Cash/Check/Credit/ Date/ Check number/Purpose of expense/Amount
Put one page into a separate envelope or file and label it on the outside. Separate and place receipts into each envelope once a month and note all cash, checks and credit expenses for that category.
And you'll see personalized content just for you whenever you click the My Feed .
SheKnows is making some changes!