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Tips for organizing your paperwork

Date posted:  9/12/17 10:00:00 AM Organizing documents and receipts is vital.

Organizing documents and receipts is vital. How else will you be able to track down financial information when filing your taxes or when you need to verify something? Most importantly, if you're ever audited by the IRS, a strategic system lets you easily locate these documents.

Whether you prefer paper or digital files, try implementing one of the following organization methods:

Physical organization

If you are someone who prefers physical files, collect paper receipts, order forms, details and other documents of importance. You may have been emailed some items; be sure to print those.

Now you need to choose what type of filing system you want to implement. ToughNickel recommended two options to organize paper files: a binder or an expanding file folder.

Binder

Binders are an attractive option because they keep all your files together, including donation receipts, W2 forms and Form 1099s. By having everything in one place, you are able to flip back and forth to find what you need. You can organize a binder any way you see fit, whether by month and year or document type. You may even decide to have a binder dedicated to only donation receipts or healthcare paperwork.

Expanding File Folder

If a binder seems like too much maintenance, consider using an expanding file folder. Since expanding file folders are not as large as binders, this method is ideal if you do not have a lot of paperwork or want to dedicate one expanding file to donation receipts and another to W2s. Identify each section with a tab to help you quickly find items when you need them. However, expanding file folders start to lose usefulness as you continue to add documents. If you have a lot of paperwork, it might be time to switch to a binder.

Digital Organization

Don't like keeping paperwork around the house or apartment? Organize documents digitally. Not only will you cut back on paper usage, but you can access your files from a phone, computer or tablet.
There are a few ways to organize your files electronically. Start by downloading documents to a computer or scanning items to create digital copies. You can either use a scanning machine or a mobile scanning app like Microsoft Office Lens or Evernote Scannable, CNET recommended.

Then, set up a folder structure to easily track down those digital files. For example, title the main folder "Taxes," and then create subfolders for the tax year and accompanying document type. The same method applies if you want to keep your tax documents in a cloud file system like Google Drive.

By going digital, you are able to effortlessly add documents as you receive them. Still, remain committed and remember to scan all your paper documents; otherwise your physical or digital storage system will be missing important information.

There is no right way to organize your paperwork and important documents. Experiment with the systems listed above or use a combination of two methods so you can quickly track down the information you need when you need it.