Tax Time

That most dreaded season of the year is fast approaching - Tax Time! Below are some ideas for improving your filing system and collecting the documents you need. An effective process will save you time and frustration next year, and possibly even increase your deductions and save you money! That makes the organizing investment now all worth it now, right?

First, plan to keep all your files with the necessary papers in one place. It should be fairly accessible since you'll collect documents throughout the year that need to be stored here.

Next, set up a folder for each of these categories (if they apply to you), which will create storage for most everything needed for your personal tax files:

* Income- Include pay stubs, W-2s, 1099s, interest statements, and dividend statements

* Medical- File receipts for medical expenses, and health insurance out-of-pocket expenses

* Donations-Include receipts (with lists of items) for both cash and non-cash donations

* Real Estate- File interest statements from mortgage, tax assessments

* Child Care- Payment receipts for potential deductions

* Tax Correspondence- Any letters from the IRS or your state revenue service

* Student Loans - File statements of loan interest paid

* Misc. Receipts- Add any receipts that might be needed for deductions, particularly if you are self-employed

* Payments- Include any records of advance tax payments

* Past Year Tax Returns- File old tax returns by year. These can be stored in less accessible areas if storage space is an issue

A little time now and minimal maintenance through the year will make 2010 a snap!