How To Organize and Protect Your Tax Documents

Its the new year and before you know it, it will once again be tax season in America. I don't know about you but to me, tax season basically means having to scan and send documents such as mortgage statements, W2s, insurance statements, business income statements etc etc to my accountants and then they work their magic and send back more PDFs in return. This happens every year so by the end of each tax season, I add more and more documents to my Tax Documents archive.

As you know, keeping your archive of tax documents organized is very important as they are almost always required for transactions of a financial nature. In this post, I am going to share with you how I organize my tax documents after each tax season is over.

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Step 1: Store Your Tax Archive in the Cloud

If you don't have one already, sign up with a cloud file storage service such as Dropbox, Google Drive or OneDrive. Having your tax archive stored in the cloud is great because you can access it from virtually anywhere with an internet connection and you will not lose it should your computer hard drive fail.

Step 2: Create a Folder For Each Tax Year

This one is self-explanatory; in the cloud account, create a folder for each tax year e.g. 2017, 2018, 2019 and so on.

Step 3: Merge All Your PDF Files

The goal here is to end up with a total of 2 PDF files for each tax year.

Merge all the supporting PDF files together into a single PDF (this is the stuff you send to your accountant in order for them to file your taxes) and then merge all the documents your accountant sends back to you into another PDF. You should name the files accordingly.

Step 4: Compress Your PDF Files

Once your PDFs are merged, you will likely notice that the size of the resulting document is fairly large. This is especially true if your supporting documents were scanned in.

Since neither bandwidth nor storage space is free, compress your PDF files to reduce them in size so that they are easier to store and share. You can carry out this step prior to step 3 and achieve the same result.

Step 5: Password Protect Your PDF Documents

Some of you may have been hesitant about the rest of the advice here when the first step was to store your private tax documents in the cloud. And rightly so; with the way the world is going, its more a matter of when and not if, they get hacked.

You definitely don't want the bad guys to have full access to all that private data.

This is reason we have the final step in organizing your tax documents is to protect your PDF documents with a strong password. Once your PDF documents are password protected, only the person with the password can open and view their contents.

For tips on creating strong passwords, check out this LifeHacker article.

Tip: once you have created your strong PDF password, be sure to save it in a password manager such as LastPass or 1Password in case you ever forget it.

Get started with organizing and protecting your tax documents by downloading All-About-PDF today.