Create a system that suits your style
The key is to determine what type of filing system you need. If you file a 1040EZ form each year, you don't need a sophisticated system with a lot of dividers and folders. A simple, dedicated solution to store all of your tax-related documents should suffice. However, if you itemize a lot of expenses, have a lot of deductions and generally follow a more detailed process for filing, a system with a variety of folders will help you attain a more precise level of organization. This will save you time when it's time to file.
Consider the available space
In addition to considering how you file your taxes, think about the available space in your home when creating a tax time filing system. If you have a home office, identify one drawer in a file cabinet for current tax-related paperwork and returns from recent years. If space is limited or if you don't have a home office, opt for an attractive storage box or portable filing solution that requires little space on a shelf or in a closet. Choose a solution in materials and colors that coordinate with your décor.
Stay true to the system
Whatever method you choose to store your paperwork, it should be easily accessible, which means you're more likely to use it. Commit to immediately filing tax-related items as soon as they arrive in your home.
To avoid last-minute hassles, create a calendar to plan your tax time to-dos, and aim to have your taxes filed well in advance of the deadline. Work back from your target completion date and set aside a time to organize receipts for deductions, meet with a tax advisor, go online to enter your return, etc. You'll experience less stress when you divide the tax return process into manageable projects.