Organize Your Tax Records

Realizing poor record keeping cost money and time, the author came up with a system to organize her family's tax records.

| March/April 1981

  • 068 tax documents
    Organizing her family's tax records saved the author time and money.

  • 068 tax documents

My tax accountant used to turn a sickly shade of green when I'd arrive at his office carrying my year's tax records in a shoebox that threatened to explode its seams at any moment. And I imagine he'd have been even more distressed if he'd been aware that I usually had to spend a week, at least, searching in every drawer and closet for those jumbled bits and pieces of financial information.

Deep down inside, I knew that my slip-shod technique (or lack of it) was no way for an ex-accounting student (or anyone else, for that matter) to keep books. So when the tax man started to recommend other accountants that I might want to try the following year, I decided — like it or not — to set up a filing system.

Still, I didn't want to spend a lot of time maintaining tax records. If my system were to work at all, I knew it would have to be simple and convenient yet allow me to answer all of Uncle Sam's possible questions at a glance.

Help From the Government

While many folks don't have enough appropriate expenses each year to itemize their deductions, the only way many of us can know whether it'll serve our purposes to do so is to collect information throughout the year. My first step, therefore, was to obtain a copy of "the long form" (1040). And, in the course of looking over that questionnaire, I discovered that my "dream system" had already been designed. After gathering a box, some tape, a pair of scissors, and a few folders, I was able to put it to work!

Tax forms are available from banks, post offices, accountants, or the Internal Revenue Service itself. (Be sure to get two or three copies of every sheet that might apply to your return.) Your previous year's form will work fine as a basis for a filing system, since there are usually very few drastic changes from one year to the next. Form 1040 is especially well suited to this job, because it lists all of the deductible expenses and all of the special schedules needed. (If you've itemized in the past, your old tax report will probably tell you which of the latter might be required.)

Personalized Partitions

Knowing that both my husband and I will likely be self-employed at least part of any given year (he's a carpenter and I'm a freelance writer), I picked up extra copies of Schedule C (Profit and Loss from Business). Then, since we might — at some time in the future — be selling stock, I collected copies of Schedule D (Capital Gains and Losses), as well as Schedule E (Supplemental Income) to report the money we make renting the "old home place" when we go traveling. I didn't bother, however, with such forms as Schedule F (Farm Income) or R & RP (Credit for the Elderly), because these weren't applicable to our situation.


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