Do You Know the Four Types of Paperwork You Need for Taxes?

Does tax time bring about a wave of anxiety? When you’re navigating a sea of paperwork, it can make anyone feel overwhelmed. But there’s a simple way to make tax preparation easier, whether you’re working with a tax professional or filing them yourself.

“Knowing what paperwork you need to have to prepare your tax returns accurately can save you time and money,” says tax professional Iris Spinler-Waid, client service director at H&R Block headquarters in Kansas City, Missouri.

And there’s no big secret as to what documents you need. “To expedite the tax prep process,” she says, “make sure all of your paperwork is organized by type.”

Here are the four key categories you will need:

  1. General information
    Includes Social Security number(s) for yourself, your spouse and your dependents; previous year’s tax returns (federal, and if applicable, state). Also, be sure to tell your tax preparer about any life changes that occurred during the year, such as marriage, divorce, a new child, a new home, or a new job.
  2. Income documents
    W-2s, 1099s for interest, dividends and other types of investment income, or unemployment income records.
  3. Deduction/credit records
    Examples include receipts or statements for medical expenses, charitable contributions, job search expenses or casualty losses that you had during the year; Forms 1098 or other mortgage interest statements; real estate tax receipts; personal property tax receipts; day care expenses; Forms 1098-T and other documentation of education payments.
  4. Self-employed/small business paperwork (if applicable)
    Information such as records of your business income; records of your business expenses (receipts, invoices, bills); self-employed health insurance premiums paid and self-employed retirement plan contributions made during the year.

“If you are unsure if a document is one you will need, be sure to save it and give it to your tax preparer,” says Spinler-Waid.

For more information on what paperwork you need to prepare your taxes, check out the personal tax prep checklist or small business tax prep checklist from H&R Block, or contact a tax professional near you.

Now let’s get all that paperwork organized. Here’s a simple and colorful way to sort your paperwork by type.

Using color to organize your paperwork. A color-coded filing system can help you get more out of your organization. Using Avery File Folder Labels or Avery Arched Labels in different colors can help you identify folders quickly and easily by category. Follow these steps:

  1. Assign a color for each category
    For example, green = income documents, and blue = deduction/credit records, etc.
  2. Customize your file folder labels with Avery Design & Print Online
    Avery File Folder Labels are available in assorted colors, or you can use free colorful design templates on Avery Design & Print Online to customize Avery Arched Labels. Create custom titles for your file folder labels and print.
  3. Use the same color labels for multiple folders that fit under the same category
    Think “birds of a feather flock together.” So while your daycare expenses and property tax receipts may be kept in separate folders, since they belong to the same category of “deduction/credit records” the same color label will appear on both folders. It’ll make these items easy to find when you’re tackling each category of your taxes.
  4. File away your paperwork into designated folders
    This filing system is not only great to use this year, but also a good way to collect and sort paperwork throughout the year to get a head start on next year’s taxes.

“Tax prep is much easier for you and your tax professional if you have all the documents you need,” says Spinler-Waid. And with just a little effort putting your paperwork in order, you can make your tax experience easier for everyone.