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Tax Season Need Not Be Taxing

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Bits & Pieces Column

Helpful Chitchat

 

 

 

 

 

 

 

By Evelyn J. Mocbeichel

 

With January’s arrival, mailings containing the documents required for tax preparation will begin to appear. April 15th seems to sneak up on us, and being organized helps lessen the frustration of finding necessary information. If files are kept in order year-round, there is no need to panic. The hardest part about preparing your taxes is locating the papers that you have saved all year long. Putting your fingers on the forms and important records or cancelled checks you need can be a challenge, especially after a busy holiday season. To help with storing files and records visit an office supply store to see what they offer.

Filing

At the beginning of every year I purchase a large, durable accordion-style folder for holding the papers I file. Some folders have designated names for each slot, starting with Auto Insurance, Bank Records, Credit Cards, Dental Bills, Income, Medical, Utilities, etc. You can also buy the same file folder with alphabetical listings of “A to Z” and create your own titles on each letter pocket using a label maker. After each bill is paid, slip the stub in the appropriate folder making sure the check number and payment date are on the statement. A duplicate computer record can also be kept with account numbers and totals using a tax or home accounting program. An Excel file can tally your accounts with each new entry. At the end of the year, with this sheet you can easily assess how much you have donated to charity or paid out in medical bills in addition to any other totals needed to compute your income taxes. The IRS suggests you keep your income tax records and files for at least seven years in the event you are called in for an audit. A side note—just because you have not heard from the IRS the year after you filed your taxes, that doesn’t mean you won’t hear from them sometime down the road.

If we have no dispute regarding payment of our utility bills, we shred them after three years. When it is time to destroy old papers, whether it is a statement, medical record or other financial piece of information, think about the shredder you are using. A “cross cut” machine cuts paper on a diagonal, making it impossible to piece together any information. Don’t skimp on this piece of equipment if you are considering purchasing one. It is your life history and personal identity that are at stake. If you think income tax time is a nightmare, just imagine what identity theft would be like!

 

January 10, 2018 |

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