I have always been very careful with my tax documents. Up until a few years ago, I submitted all documentation by mail and kept our information offline.

When the IRS stopped sending the tax forms, I looked to the Internet to get the needed forms and to electronically file our taxes. Shortly after that move, the state of South Carolina had a security breech.

Now, I am very thankful that I opted to wait for our return and get a paper check. By doing so, the hackers were not privy to our bank account information.

In keeping our tax records together, I file 3 sections of paperwork which comprises our 2012 tax documents.

2012 Tax Documents

With federal, state, and electronic filing paperwork, I keep the following documents within the 11^th file opening of File Box 3:

Federal Tax Documents

• Copy of tax refund check
• Federal Income Tax Return with Schedules

State Tax Documents

• Copy of tax refund check
• State Income Tax Return

Electronic Filing Documents

• TaxAct Declaration
• TaxAct Filing Instructions for Federal and State
• TaxAct Status Report
• TaxAct Confirmations
• TaxAct Joint Return vs. Separate Returns Analysis

Each of these sections is either stapled or paper clipped together and then one large paper clip combines all three sections into one bundle. This bundle is housed behind our summary sheet and is the first of three years kept within this file opening of our tax records category.

In using time wisely, I keep the main tax documents within this file opening while the specific documents are housed with our last 3 years of documents in a large tote. As I file our taxes each year, I like to compare our returns to see the changes to our deductions based on the new tax laws.

The next set of documents in this file opening is our 2011 Tax documents which I will share next week. Keep on working on those important documents as you will not regret your investment of time. Happy organizing!

Question: Do you elect to have your refund automatically deposited into your bank account? 

Realizing that taxes are not typically on your brain (or mine) at the end of summer, I am focusing on creating a home for those important documents with our last category in our important documents. This way when tax season comes, you are one step ahead.

I remember when I started organizing our documents, Paul and I had years of records. As I read and organized, I found a system that worked for me.

Keeping with my preferred method, I included a summary sheet within this category.

Summary Sheet

Though most of my summary sheets include sensitive information, this summary sheet is more of a checklist. I keep information that someone else may need to know regarding our tax documents. A sample of the information is as follows:

• For simple tax returns, keep documentation for 3 years.
• For more complicated returns (business, capital gains or losses, Roth IRA conversions, etc.), keep documentation for 6 years.
• Keep satisfied loans for at least 7 years.
• File receipts for charities, investments, business expenses, real estate and mortgage interest and points with corresponding tax return documentation.

My summary sheet also includes the location of our tax documents. In keeping only the tax forms within File Box 3, I keep the 3+-year records in totes. With instructions as to where to find those documents, the executor of our estate can find those documents should he need access to them.

In using time wisely, my summary sheet saves me time in looking up information when I question whether or not to keep records. Though this sheet is optional, I find it very useful.

As you evaluate which resources work for you, experiment with similar methods that you use in other organizational projects. No need to reinvent the wheel when you find a system that works for you. Happy organizing!

Question: How long do you keep your tax records?

Prepare yourself . . . this is the last category of our important documents file.

Yes! We have reached the last one after a few years of organizing our important documents broken down into File Box 1, File Box 2, and File Box 3.

Within File Box 3, we have created categories for Social Security documents, Retirement Plan documents, Investment documents, and Estate Planning documents. The last category is our Tax Records documents.

Though I keep our 3-year records in large totes, I have a section within our important documents dedicated to our tax records.

The records held within our important document file reside within one file opening and include the following:

Tax Records Documents

• Tax Document Summary Sheet
• Tax Records from 2012
• Tax Records from 2011
• Tax Records from 2010

As I share the contents of our Tax Records documents, these are choices that Paul and I have made. I share them as an example of how to organize. Your situation maybe more or less complicated, so adjust these suggestions to meet your needs.

The goal is to organize your important documents. My documents are complete although routine maintenance is ongoing. In using time wisely to get these documents organized, you will save money from paying for duplicate documents, energy from searching through stacks of papers, and time by going directly to the source. Happy organizing!

Question: Do you keep all your tax records in one location, or do you keep the pertinent information with your important documents?