by | April 2013 | NAPLES DAILY NEWS | 0 comments

When it comes to organizing your tax-related paperwork, there are two types of people: those who toss every single piece of paper, receipt, bill and mangled envelope into a large Hefty trash bag; and those who meticulously separate, catalog, cross-reference and organize their papers before sending them to their accountants.

No matter which category you fall into, tax preparation, unfortunately, is a daunting and inevitable task no one can escape.

Organizing your taxes comes down to two things – TIME and MONEY. The more organized you are, the less time it takes your accountant to prepare your taxes; the less time it takes your accountant to sift through a surfeit of papers, the fewer greenbacks it’ll cost you. Bottom line? Time really is money.

Although I do most everything on the computer (a combination of Excel and Intuit’s QuickBooks), there still remains an assortment of relevant papers to save and organize for my accountant. For these, I use a clear, 8.5” x 11” plastic project envelope, the kind that opens at the top, which makes it easy to see exactly what I’ve been saving throughout the year. My goal is to keep it simple, so I use one sleeve per calendar year and mark the envelope with a label notating the year.

What goes into this clear sleeve? Receipts for donations; copies of invoices pertaining to tax preparation and legal advice; copies of all real estate tax payments; federal tax payments and quarterly 1040 estimate payments, as well as copies of any HUD statements for real estate transactions made that year, to name a few.

Other forms, such as, 1065 (K-1), 1099’s and W-2 tax forms will also be placed in this envelope as they arrive. Check your state tax laws for local and state tax requirements.

Rather than waiting until the last minute, I strongly suggest sorting through and reviewing the contents of the clear envelope three or four times a year to ensure everything is in order.

At the end of the year, I copy everything in the clear envelope; sending the originals to my accountant and keeping copies, in the same clear sleeve as before, in my files for seven years.

Remember; unless the papers are tax-related, don’t put them in this clear sleeve, which should be reserved for pertinent papers only. Additionally, unless you have a home-based office, you probably don’t need to save bank and credit card statements; paid insurance bills and copies of your utility bills since these can easily be retrieved online, should you ever get audited and need to supply back-up copies.

You should also keep a separate permanent file for important papers, such as your car title; home and auto insurance policies; all past and present HUD statements; invoices for capital improvements made to real property; stocks, bonds, IRA and mutual fund purchase dates/costs, as well as copies of your will, medical directive and any essential medical records you may have. Keep this file separate from your annual tax files and to store in a safe place.

Here are a few more hints to ease the pain of preparing your taxes:

  • Talk to your accountant during the year, keeping him or her up to date with activities that may affect your taxes, such as divorce, marriage, death, natural disasters, real estate transactions, work-related household moves, inheritances and major financial transactions.
  • Have copies of investment K-1 forms and 1099 forms sent directly to your accountant from the individual financial institutions.
  • Save HUD statements and past tax returns with supporting documents (W-2 forms and 1099 statements) indefinitely.
  • Don’t overload your accountant with redundant papers and receipts and don’t send check stubs or copies of your medical, dental and prescription receipts; all your tax preparer needs are the totals. Contact your accountant in September or October to discuss any year-end tax-related questions and concerns BEFORE it’s too late to do anything about it.
  • Keep records – purchase dates and costs – of all stocks, bonds and/or mutual fund purchases and splits in a “permanent” file.
  • Call your accountant 2 weeks before April 15 to see if he (or she) needs you to do anything, such as make calls to retrieve missing K-1’s or revised 1099’s, that will make things easier for him (or her) to complete your taxes.


Want fast service? My accountant’s advice is pretty straightforward: send your paperwork in before March 1, pay your bill on time and don’t complain about the cost; and don’t pester your accountant, he or she will call you when they need to.

The above ideas are solely suggestions. For a comprehensive guideline, please speak with a tax professional and visit the Internal Revenue Service at