Posted by Lending Club :: January 18, 2008 @ 10:10 am

The start of a new year also signifies the end of the previous tax year. Even though April 15th still seems like a long way off, creating a system for organizing your taxes now may save you time, and money, later.

I called this post the tax info shoebox because that’s my organization method. There always seems to be a fresh shoebox lying around after the holidays after someone in my family receives new shoes, sneakers, slippers, etc. I keep this box in my home office and use it to collect all of the tax documents that will be coming in the mail in the next few months.

In addition to documents from your employer, you can also expect information from all institutions where you have taxable income or expenses. For example, if you have a person-to-person loan portfolio on LendingClub.com, then you can expect information from them stating the interest you have earned. When you think of the many banks you deal with, and the numerous investment and income sources you may have, the amount of paperwork that you are collecting can quickly become quite large. Once my shoebox is out for the tax year, I also add in the receipts from any charitable donations for the year that I have been saving.

Being organized will certainly save you time when you do your taxes, and it may save you money as well. If you use a tax preparer, as opposed to doing your taxes yourself, then a portion of the fee is typically tied to how long it takes to prepare your return. Making the job easier will help speed up the process and result in a lower preparation fee.

Being organized isn’t going to make your tax liability any less, but it may make the preparation process more pleasant. Getting organized now, before the documentation starts to arrive, will surely pay off.