Organize Your 2010 Financial Documents

We have finally said goodbye to the year 2010, and that means it’s time to organize your financial documents so that you are ready for tax time — and so that you can clear things for 2011. It can be an overwhelming task to get your financial information and documents together. You don’t have to do it all at once, though. Break it down into smaller tasks over the course of a few days to make it manageable.

Figuring Out What You Have

First of all, it helps to figure out what you have. Find out what documents you need for your 2010 tax return. This includes receipts that document charitable donations and business expenses, as well as documents such as mortgage interest rate statements and investment account statements, as well as W-2s and 1099s. Consider what documents apply to your situation, and make a list of what you will need to back up any credits and deductions that you have.

Next, go through your papers. Hopefully, you have been saving these somewhere. You can buy file folders at the office supply store and use these to keep like documents together. I like to put all of the documents related to my business expenses together, put receipts for charitable donations together, put receipts and statements related to my husband’s school expenses together, put everything related to my investments together…You get the idea. After sorting everything, use clips to keep things together, and then group the smaller bundles as income (my P&L statement for my business goes in this category, with my 1099s and my husband’s W-2), above-the-line deductions, Schedule A deductions and credits.

If there are papers you’re not sure whether or not you need, set them aside in their own bundle until you can determine their status. Your latest insurance policy papers, warranty information on various products, and receipts for big ticket items or that you need for some other purpose, should be kept somewhere safe. The documents you know you don’t need should be shredded.

Figuring Out What You Still Need

Often, I sort through my financial documents before I have everything I need. Usually, I am waiting for 1099s to come in, as well as mortgage interest information. However, if you have the rest of your documents sorted, it is fairly easy to simply add new documents to the appropriate bundle when they arrive. So that you know what you are looking for, make a list of what you still need. That way you know what to look for when the mail arrives.

For 2011, start the year organized. I keep file folders, properly labelled, in a cabinet. Everything I need, after entering it into my personal finance software, is filed appropriately throughout the year. That way, when it comes time to organize my financial documents, all I need to do is pull them out and bundle them in preparation for my taxes. It saves time and effort for me, and it saves time for my accountant as he prepares my tax return.

This is a guest post by Miranda Marquit.  Miranda is a journalistically trained freelance writer and professional blogger working from home.  She is a contributor for Mainstreet.com, Personal Dividends and several other sites.  Miranda is not affiliated or endorsed by LPL Financial.

Creative Commons License photo credit: Pulpolux !!!

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Comments | 1 Response

  1. says

    I really dread doing this at the beginning of every year, but it’s a necessary evil. I really should just get it over with so it isn’t hanging over me. Thanks for the advice!

    Jane

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