For me, March 1 marked the official end of tax season. Since I filed our household's Individual Income Tax Return early, and I didn't have to file for an extension (which is a topic for another day), I can now close out Tax Year 2010 and focus on 2011.
How is the best way to start doing that?
My system is pretty straight-forward and easy to use. I have a 2-drawer filing cabinet that fits under my desk. I have hanging files with tabs that are in alphabetical order: ie bank statements, credit card receipts, medical bills, utilities, etc.
Whenever I get a bill paid, I file the receipt in the proper hanging file. Same goes for credit card statements, dental and medical bills, life insurance statements, and other "stuff" that needs a home during the year. That way, I have it right where I need it. This is my "Active" filing cabinet.
Then I have a larger filing cabinet where I store 2 years worth of tax years. This is my "Historical" filing cabinet. Since it is now tax year 2011, I cleaned out my 2-drawer filing cabinet and have those files in a box by my desk. I am going to go into my larger filing cabinet and take out Tax Year 2008 and put that into a Bankers Box. I'll label it with the proper tax year and store it. That way, I'll have Tax Years 2009 and 2010 in my larger filing cabinet.
I keep my records for 10 years. I know, I am probably anal, but that is what I do. I have storage space set aside in my house, so it doesn't take up alot of room. I keep 5 years in my pantry/laundry/storage room and 5 years in the basement.
That is my goal for this week: To get all of my records in order, purge what I don't need (this is where a top-notch shredder really pays for itself) and keep what is important, rearrange my filing cabinets so that the proper tax years are where they need to be, put the older, historical files in Bankers Boxes, and put those in their proper place.