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In the coming weeks, tax documents like 1099s, W2s, and more will start arriving in our mailboxes, leading to a pile of paperwork by April. Stay ahead by organizing everything with a simple three-folder method.
This tip comes from The Motley Fool, and it's an easy one to follow. Sort all of your tax documents into three main folders:
Folder #1: Income: This folder should contain your 1099s and W2s, which report your income for the year, whether it comes from your job, interest from savings, dividends, and other sources.
Folder #2: Expenses and Deductions: According to The Fool, this folder should hold your mortgage statements, investment-related costs, medical expenses, child care invoices, and receipts for non-reimbursed work-related expenses such as gas, food, and lodging. In short, keep all the receipts for deductions you plan to claim come tax time.
Folder #3: Investments: This is where you’ll store all your investment statements, dividend notices, purchase receipts, and any other paperwork related to your investments that you’ll need for tax season. You can even organize this folder further into categories like taxable, deductible/tax-deferred, and nondeductible investments.
This simple system can make tax time much less stressful. They also provide helpful tax tips for each category, so be sure to visit the full post at the link below to get all the details.
Photo by 401(k) 2012.
