Make tax time a breeze with easy record-keeping tips

Tax records and receipts are important documents that you may need to refer to in the future. A pile of documents on your desk or spread around multiple rooms in your home is not going to make it easy to find. Make sure you dont get caught off guard with these simple tips.

Learn what to keep. Although the world is changing to more online digital media, there are still a lot of paper copies of receipts and records. It is important that you hold on to everything as long as necessary. You should retain documents relating to an asset (for example, improvements to your house) for as long as you own the asset. Similarly, for insurance purposes, retain the receipts of all items you own, for as long as you own them. If in doubt, it may be safer to retain paperwork than to destroy it.

Dedicate some space. It is important to have some sort of filing system for tax records and receipts. Remember that you may need to keep quite a lot of documents for a long time, so make sure you dedicate the right amount of space. A small filing cabinet at home could be ideal, but a large drawer or storage box will work well, too. Make sure the box or cabinet is in a place that you can easily get to. Stowing it away in the attic, for example, makes it hard to access. Keep records in your home office, or perhaps a spare bedroom, if you have the space.

Learn to file systematically. There are plenty of ways to file your documents logically. The simplest way to file documents is by date order, so that you can find documents relating to a certain period. Within this filing system, however, you may also want to file things by category. Tax statements, for example, should logically be kept together. Expense receipts should also be kept together, and so on. Think about a filing system that works for you, and then create folders or envelopes to store relevant documents together.

Consider paperless storage. Receipts and documents can take up a lot of space. Scanning those documents and storing electronically can be more efficient—and much easier to manage. It can be more secure, too. Make sure you keep paper copies of documents that cannot be accepted electronically, and ensure that you take regular back-ups, too. Always shred documents showing personal information, once you have scanned and filed them.

Tax records and receipts may seem cumbersome, but the reality is that you need to keep good records. By getting into a few good habits, you can spend just a little time on this and save a lot of grief further down the line.

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