We all dread tax season. Even the most organized of us wonder whether we kept the correct records. Others break a sweat at the thought of that shoebox under the bed overflowing with crumpled receipts. Swimming through a disorganized pile of paper would drive anyone mad. Take these six simple steps and tame your paper tiger before it gets out of hand. That way, when the taxman comes knocking, you won’t be tearing your hair out.
1. Keep it together
Every time you empty your wallet or pay a bill, put those receipts in a designated spot. While a shoebox or drawer might work for some, an accordion file, a series of separate envelopes or set of files in your filing cabinet are the best places to put your paper.
2. Be a label queen
Itâs all about creating a system. Label each file by the appropriate tax classification (utilities, transportation, charitable donations, RRSP contributions etc.) and sort your receipts in those categories.
3. Get regular
Clear your desk and wallet of receipts on a regular basis (say, once a week). That way your wallet wonât bulge open and those receipts wonât get lost or torn floating around your bag or coat pocket.
4. Know what to toss
What you can write off depends on your circumstances â are you self-employed for example? As a general rule, you should keep your credit card statements, T4s, RRSP contributions, out-of-pocket medical expenses, and charity receipts. You can toss ATM receipts and credit card receipts for smaller purchases you canât write off (i.e., your monthly pedicure).
5. Mark it
Write on your receipts what the expense was for â i.e., you picked up the lunch tab with a potential client.
6. Keep it
Itâs recommended that you retain your tax filing information for six years (just in case you get audited).