How To Get Your Tax Documents Organized for 2020 And Beyond

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This post has been sponsored by H&R Block

Organizing tax paperwork makes tax season less stressful. 

And with all of your tax documents getting sent to you now, it is the best time to get started organizing for your annual taxes.

By staying organized year-round, you’ll have less work to do each tax season, and you’ll feel fully prepared for the upcoming year.

With your tax documents organized and ready, you can file your taxes with H&R Block online or in-person. 

Here are several tips for organizing your tax documents.

Clean Up and Organize

Every year you should get rid of:

  • Expense reimbursements
  • Bill payment receipts
  • Health benefit information
  • Bank statements (unless you need them to support tax filings, keep them longer)

Every 3-4 years get rid of:

  • Tax returns (at least three years from the due date of return, or about four calendar years)
  • Paycheck stubs (only until W-2 form has been reconciled) 
  • Social security statement (when you receive the new statement, shred the old one)

As needed:

  • Credit card statements (unless needed to support tax filings)
  • Real estate deeds (as long as you own the property)
  • Home purchase and improvement records (as long as you own the property)
  • Contracts (until updated)
  • Vehicle titles and maintenance records (until you sell or dispose the car)
  • Safe deposit box inventory and key (as long as you have it)
  • Warranty for large appliances or expensive items (keep for length of warranty)
  • Investment certificates (until you cash or sell them)

Keep forever:

  • Will or trust
  • Education records (transcripts and diplomas)
  • Birth certificates
  • Life insurance
  • Marriage licenses
  • Divorce Decrees
  • Social security card
  • Family health records
  • Power(s) of attorney
  • Military service records
  • Passports (renewable every ten years for adults over age 16)

Things to keep in a safe deposit box:

  • Leases
  • Wills
  • Marriage certificates
  • Automobile titles
  • Birth certificate
  • Mortgage papers
  • Patents and copyrights

Keep in mind, if the IRS believes your tax return may be fraudulent, they have an indefinite amount of time to examine your return and records.   

It’s important to remember that the responsibility of keeping these records falls on you, no one else.

Even if you have a CPA or tax professional, you are still liable to keep these documents organized and prepared in case the IRS needs to see them.  

It’s recommended to keep the following documents for 3-4 years.

Keep these tax documents:

  • Schedule(s) K1(for S-Corps)
  • Form(s) W-2 (for employee’s annual wages and the amount of taxes withheld from paycheck)
  • Form(s) 1099 (for people who have been paid at least $600 in services, rents, prizes, or awards and other income payments)
  • Form(s) 1098 (for reporting interest payments made by an individual or sole proprietary to the government for tax purposes)
  • Form(s) 2439 (used when a mutual fund may keep some capital gains and pay a tax on them)
  • Form(s) 5498 (used if you made contributions to an IRA)
  • Form 2119(used to report the sale of your home)

Keep these statements: 

  • Bank statement
  • Brokerage statement
  • Mutual fund statement
  • Retirement plan statement

Keep these expenses:

  • Homeowner expenses
  • Casualty or theft losses
  • Gambling losses
  • Custodial fees
  • Education expenses

Keep these charitable donations:

  • Relevant receipts, letters, paycheck stubs, bank statements
  • Photos of donated property
  • Appraisal

How to keep all these documents organized

It’s never a good idea to throw all of your essential documents in one folder, which is why I recommend getting large envelopes and labeling them for each category (tax documents, statements, expenses, and so on).

Another great idea is getting a large binder with dividers.

Many people opt for this option since all of their documents store in one binder, and it’s easy to add and attach folders inside. 

ANNUAL CHECK UP 

Each year, you’ll want to go through your tax documents (and everything listed above) to see what can get tossed. 

Conclusion

Once you’re ready to file your taxes, you can head over to H&R Block and file online or in person.

There are filing options for everyone whether you have a simple W-2 or you’re self-employed.

You can even connect with a Tax Pro who will make the tax process easy and stress-free, while also guaranteeing you’ll get the most money back on your return. 

How do you stay organized for tax season every year?

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