How To Organize Your 2023 Tax Documents — And Turn Tax Chaos Into Calm
It takes some work, but it makes a big difference.
We’ve all been there. It’s two weeks (or two days) until April 15, and you’re scrambling to organize the past 12 months of your life. If you’re itemizing any deductions, this means tracking down old receipts, digging up the paperwork to deduct the cost of your daughter’s day care, and remembering where you donated your old clothes and that sofa you found in the shed. So what’s the solution? The solution: Start organizing your documents ahead of time to make filing your taxes as smooth and stress-free as possible.
Here’s a little secret: Tax season doesn’t have to be chaotic. The key to tax season success (and sanity) is establishing a system that makes tracking your expenses a daily habit — versus a chore. Creating a process and sticking with it throughout the year means less time searching for paperwork when April rolls around, not to mention taking away the worry that you’re missing important deductions, credits, and other tax breaks. Save money, save time, and save yourself a headache with these simple organization tips.
What documents can I expect to receive?
Tax documents vary depending on your occupation. Below is a list of standard documents you can expect to receive during tax season, as well as miscellaneous documents you should save throughout the year — these are especially important if you are an independent consultant, contractor, or freelancer.
Standard tax documents you’ll receive from employers and financial institutions:
- W-2 (Wages from employment)
- 1098 (Student loans, mortgage interest)
- 1099-MISC (Non-employee compensation)
- 1099-INT (Interest income from savings accounts)
- 1099-DIV (Investment income, such as dividends and capital gains)
Other documents you’ll need to track yourself:
- Charitable donation receipts
- Child care and education costs
- Medical receipts
- Contributions to tax-deferred retirement accounts (401(k), IRA)
- Volunteer time cards
- Business expense receipts: meals, utilities, equipment, supplies, mileage, advertising
- Receipts for tax-deductible home improvements, such as energy-efficiency upgrades
- Real estate tax and personal property tax documents
How can I organize these documents?
If you plan to itemize deductions on your tax return, it’s your responsibility to keep good records that prove your expenses. To do this, save and organize receipts throughout the year, storing and classifying them by category — for example: travel, office, business development. Keep your categories and your process simple enough that you’ll follow it. The result will be a more organized tax-filing process with fewer surprises.
To get started, set up designated storage spaces for receipts in your car, home, and office, so you can file receipts as you spend money. Something as simple as a manila envelope, pocket folder, or shoebox for the car and an accordion folder or filing cabinet at home will work. Place documents in their respective places immediately after making a purchase, then transfer them to the larger storage system at home on a weekly or monthly basis. Make a habit of labeling each receipt so you can remember the nature of the expense. Categories to consider:
- Gas and tolls
- Home expenses
- Child care costs
- Legal and professional fees
- Medical expenses
- Office supplies
Also, make room for the standard tax documents that begin to show up in your mail in January. Either add a separate folder for them or store them in a section of the current system that you label “Tax Documents.”
If you’re always on the go and want to store receipts digitally, consider software or smartphone apps that allow you to snap a picture and upload or email a receipt to yourself. Don’t toss those paper receipts, though. Having the document in both physical and digital storage increases safety and accuracy at tax time.
A version of this article appeared in our partner magazine, The Essential Tax Guide: 2023 Edition.