Here’s a concise and practical guide to organizing your tax documents in seven simple steps:
7 Simple Steps for Organizing Your Tax Documents
- Create a Dedicated Storage System
Choose a method that works for you—physical folders, a filing cabinet, or digital folders on your computer. Label each folder by year and type of document, such as “Income,” “Deductions,” and “Receipts.” - Gather All Necessary Documents
Collect your income statements (W-2s, 1099s), bank statements, and any documents related to investments, real estate, or loans. Include receipts for deductible expenses, such as medical costs, education, or charitable contributions. - Sort by Category
Separate documents into categories, such as income, expenses, and tax credits. Within each category, arrange the documents by date for easy reference. - Go Paperless Where Possible
Digitize paper documents by scanning them and storing them in encrypted cloud storage or on your computer. Name files clearly (e.g., “2023_W2_EmployerName”) for quick retrieval. - Review for Missing Items
Cross-check with a tax checklist to ensure you’re not missing essential forms or receipts. Common items include health insurance forms (1095-A), mortgage interest statements (1098), and student loan interest forms. - Keep Records for the Required Time
Retain your tax returns and supporting documents for at least 3-7 years, depending on your circumstances. The IRS recommends keeping records longer if you file a claim for a loss or omit income. - Schedule Regular Updates
Avoid last-minute stress by maintaining your system throughout the year. Set a monthly or quarterly reminder to file new documents and update your records.
By following these steps, you’ll save time, reduce stress, and be better prepared for tax season.
Preparing to file your taxes is no fun, even if your tax situation is simple and straightforward. No matter what, you still have to gather all the forms you get and save them for several years in case the IRS comes knocking.
I have a relatively simple process for how I save and name my forms so that they’re easy to find while I’m doing my taxes and well into the future, should I ever need them again—which you very well might, not only for the IRS but also potentially for big loans, like a mortgage. My way of doing it isn’t right or wrong, but it is a clear and simple system. If you need some help, give it a try.
Create a Folder on Your Computer (or Phone) and Name It ‘2024’
Start by making a folder for the current year and naming it “2024.” I use each year’s folders to store documents, photos, videos, and any other files that were created or relevant in this year. I have folders like this going back to 2005.
Back Up the Folder Somewhere Secure
Make sure that the folder you created is backed up somewhere secure. It doesn’t matter if you use a simple cloud storage and file syncing program, like Dropbox, OneDrive, iCloud, or backup software as long as you back it up.
Create a Subfolder Called ‘2023 Taxes’
Stick with me here. You’re doing your taxes in the year 2024, but the filing that you’re preparing is for tax year 2023. If the IRS ever asks you about your tax filing, it’s going to refer to the tax year. Yes, it’s confusing, but doing it this way will make things easier in the long run.
I came up with this particular organizing and naming method for the subfolder after several years of debating the best way to handle it. This setup has not failed me yet. I always go to the current year folder to work on my taxes, and if I need to do a quick search for, say, my tax return from 2019, I know I can search 2019 Taxes, and the correct folder will turn up.
Put Your Tax Forms Into the Subfolder
Put all the tax forms you receive into the subfolder corresponding to the correct tax year. A lot of your forms probably come as digital copies via a secure web portal, like your online bank account or your employer’s payroll system. If you receive any paper forms, scan them so you have a digital copy.
Use This Naming Convention for All the Forms You Receive
All the forms you put into the folder need a file name. Use this convention, which is designed to give you exactly the information you need quickly and efficiently every time you have to refer to your tax documents (I break down exactly what it means below):
- YEAR_NAME_FORM_INSTITUTION
Year refers to the tax year.
Name refers to your name. I include it so that I don’t confuse my tax forms with anyone else’s in my family. I’m the only one with the last name Duffy, so I use that.
