How to Organize Your Taxes and Money

By: Stephanie Watson & Sidney A Blum CFP, CPA/PFS, ChFC
Pile of tax forms.
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Tax preparation could be a messy process, but organization is possible.

If it's the beginning of April and all you've assembled to file your taxes is a messy pile of receipts, statements, and blank tax forms, you could probably use some organizational help. The average person spends more than 21 hours -- nearly a full day -- assembling and completing his or her annual tax return. Add 11 hours to that time if you plan to file a schedule C for business or a schedule E for rental properties [source: MSN].

The less time you've spent organizing things for the tax preparation process, the more time you're going to spend fumbling around for the right paperwork, and the more likely you are to make a mistake or miss out on a big deduction.

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Having the right documents and forms on hand could save you a lot of time and money on your taxes. Using the right tools to organize your taxes could mean the difference between sending hundreds, or even thousands, of extra dollars to Uncle Sam.

In this article, you'll learn some valuable tips for getting your taxes in order -- including the forms you'll need, when you'll need them and some valuable deductions you might have otherwise overlooked.


Getting Your Paperwork Together

Avoid the dreaded April 14th scramble by keeping all of your tax information for the year in one place. Have a clearly marked folder or box,into which you put all of your receipts, end-of-the-year bank statements and charitable donation forms as you get them. Divide the folder into categories like business expenses, charitable donations and office supplies to make everything easier to find later.

Another option is to scan all of your paperwork and keep it in a file on your computer desktop. This approach will cost you a bit more time on the front end, but it could make all your paperwork easier to find and organize when you actually go to file your taxes.

You should have all your tax statements from your employer, bank, investment or brokerage firm and any other institutions that handle your money by early February. These companies are legally obligated to put your statements in the mail by January 31 (or the following business day if it falls on a weekend).

Depending on your situation, here are some of the forms you can expect to receive:

  • K-1: These forms report income from a small business, partnership or trust.
  • W-2: This form from your employer shows how much money you made, tax and other deductions (including Social Security and Medicare) that your employer held from your paycheck, as well as your contributions to retirement plans, medical accounts and child care reimbursement plans.
  • 1098: Your mortgage lender sends this form detailing your mortgage interest payments for the year (provided that you paid at least $600 in interest).
  • 1098-E: This form details your student loan interest payments, if your interest is at least $600.
  • 1099: If you're an independent contractor, you'll receive one of these forms showing your income from each of your clients.
  • 1099-B: Your brokerage company will send you this statement of your investment account, as well as statements indicating when you bought and sold stocks, mutual funds or other securities.
  • 1099-DIV: This form reports your earnings from stocks and mutual funds, including dividends and capital gains distributions.
  • 1099-G: This form is your unemployment benefit statement.
  • 1099-INT: This lists the interest income you received from your bank from your checking, savings and other accounts, if applicable.
  • 1099-R: If you've taken a distribution from your pension or retirement account, you'll receive one of these statements.
  • 1099-SSA: This is your Social Security benefit statement.


What Tax Forms You Need

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Before you start the tax preparation process, you need the correct forms from the Internal Revenue Service.

Before filing your taxes, you need the correct forms from the Internal Revenue Service (IRS). Here is a list of some of the most commonly used tax forms. Everyone won't need all of these forms, so pick and choose based on your financial situation. You can download these forms (and others) from the Forms and Publications section of the IRS Web site.

As long as you meet the minimum recommended income, which is $9,350 for an individual filer and $18,700 for a couple filing jointly (under age 65), you'll need to fill out:

Form 1040/1040A: U.S. Individual Tax Return for Employees and the Self-employed
Form 1040EZ:
Income Tax Return for Single and Joint Filers with No Dependants

Here are the other forms you might need:

If you: You'll need this form:
Invest in stocks, bonds, and mutual funds and/or get interest from banking accountsForm 1040, Schedule B - Interest and Ordinary Dividends
Form 1040, Schedule D - Capital Gains and Losses
Own a small businessForm 1040, Schedule C - Profit or Loss from Business
Form 1040, Schedule C-EZ - Net Profit from Business
Are self-employedForm 1040, Schedule SE - Self-Employment Tax
Form 1099 MISC - Miscellaneous Income
Own rental property, estates, trusts, partnerships, or S corporationsForm 1040, Schedule E - Supplemental Income and Loss
Own a farmForm 1040, Schedule F - Profit or Loss from Farming
Employ workers in your household (such as a housekeeper)
Form 1040, Schedule H - Household Employment Taxes
Are retired and are receiving funds from an IRA, pension plan, annuity, or profit-sharing plan
Form 1099-R

The following forms are for deductions and credits:

Form 1040, Schedule AItemized Deductions
Form 1040, Schedule EICEarned Income Credit
Form 1040, Schedule RCredit for the Elderly or Disabled
Form 1040, Schedule MMaking Work Pay Credit
Form 8812Additional Child Tax Credit
Form 8863Education Credits
Form 8917Tuition and Fees Deduction

If you haven't organized well enough and are running behind on your taxes, you can file Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return).

If you need to itemize your tax deductions, you have a bit more work to do. Find out what you need to round up on the next page.


Itemizing Deductions and Expenses

Hold on to receipts for any tax-deductible expenses you generate throughout the year. Keep them together with your tax return, just in case the IRS needs to verify any of your deductions.

Keep receipts and forms for the following:

Contributions to retirement plans: The government will give you a tax break for contributing to a retirement account. Business owners or self-employed people can set up a Simplified Employee Pension (SEP). If you're not a business owner, you can set up a Roth IRA for the same purpose.

Charitable contributions: Not only will you do something good by contributing to a charity, but you'll lower your tax burden too. Cash donations, as well as donations of clothing, office equipment or items for a charity auction qualify as tax deductions.

Healthcare expenses: You can deduct medical and dental expenses, as well as healthcare insurance premiums, if they add up to more than 7.5 percent of your adjusted gross income.

Mileage: Every mile you drive for business, health, or charity counts as a deduction. You can deduct 50 cents per mile for business trips, as well as 16.5 cents per mile for medical or moving trips and $0.14 cents per mile for charity-related trips [source: IRS].

Real estate taxes: You can deduct state, local or foreign taxes paid on any property you own.

You can also deduct for:

  • Home mortgage interest
  • Points on refinancing your mortgage
  • Your accountant's fees for preparing last year's taxes
  • Unreimbursed job-related and job-search expenses (transportation, lodging, meals, classes, costs of printing resumes and business cards, etc.)
  • Moving expenses
  • Property loss due to casualty or theft
  • Gambling losses
  • Investment losses from previous years
  • Dependent children
  • Energy-saving home improvements
  • Self-employment tax, home office expenses and health insurance premiums if you're self-employed
  • Education expenses


Tools That Could Save You Time and Money

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Many online tools can make filing taxes easier.

Tired of slogging through piles of receipts and forms each tax season? Let someone else do the work for you. If you can't afford to invest in an accountant, several software programs can help make tax preparation less stressful. is a free, online tool that connects all of your financial information -- your checking and savings account balances, investment accounts, investments and credit cards -- in one place. The site lays out your finances on one page so you can see your entire financial picture at once. When tax time rolls around, you can quickly and easily generate reports on your business expenses, charitable contributions and virtually everything else you need to file your taxes.

Turbo Tax guides you through tax preparation and lets you file online. If you have a simple return, you can file for free. If your taxes are a bit more involved, fees start at $29.95. Turbo Tax (and many other tax preparation software programs) also makes record keeping easier by consolidating your financial information. For example, it will automatically download your credit card statement from the credit card company's Web site so you don't have to enter the information yourself.

Tax Act, H&R Block and Tax Slayer offer similar services, including a free basic filing option, as well as paid versions with greater capabilities.

When it comes time to file, you no longer need to fumble around with paperwork or stand on line for hours at the post office. The IRS offers Free File and e-file, which allow you to send your tax information electronically to the IRS online. The information is encrypted for safety.

For more information on taxes and personal finance, check the links on the next page.


Lots More Information

Related Articles

More Great Links


  • Bell, Kay. "Be on the lookout for these tax statements." (Accessed Feb. 8, 2011.)
  • Smart Money. "Filing Taxes? A List of IRS Forms You'll Need." (Accessed Feb 8. 2011.)
  • Internal Revenue Service. "IRS Announces 2010 Standard Mileage Rates." (Accessed Feb. 9, 2011.),,id=216048,00.html.
  • McCormally, Kevin. "The Most-Overlooked Tax Deductions." Kiplinger. December 2010. (Accessed Feb. 8, 2011.)
  • Mueller, Karin Price. "Midyear Tax Check: Organize Now, Save Later." Entrepreneur. August 3, 2010. (Accessed Feb. 10, 2011.)
  • Pagliarini, Robert. "Tax Tip: Save Time Filing Your Taxes." CBS Money Watch. April 8, 2010. (Accessed Feb. 8, 2011.)
  • Schnepper, Jeff. "10 big deductions many people miss." MSN. October 29, 2010. (Accessed Feb. 10. 2011.)
  • Schnepper, Jeff. "Should You Do Your Own Taxes?" October 27, 2010. (Accessed Feb. 9, 2011.)