Tag Archives: files

The Best Wedding Gift Ever

Your child is getting married or graduating or having a baby…what is the most thoughtful gift you could give them that would last a lifetime? A filing system!

Now, a filing system may sound like the most boring, uninspired gift you could possibly give someone but bear with us while we explain…

A good basic filing system is an essential part of an organized life. Despite the promises of a paperless world, we constantly see people overwhelmed and confused by piles of paper in their homes. Often the problem starts at one of these of these major life events where suddenly the amount and types of paper coming in multiplies exponentially.

For a new graduate, having a central place to manage personal records, job history, and tax documents starts to teach them about leading an adult life.

For couples getting married, having a central place where all important insurance, ownership, certificates, account & tax documents are kept minimizes stress and will help them manage a life that will become increasingly more complicated.

For new parents, having a central place to keep health records, school paperwork, parenting resources, and sports/camp info prevents the stress and inefficiency of searching the house for needed documents. Providing a dedicated box for memorabilia/artwork is a great addition to a filing system.

You can easily set up a basic system in a portable file box, small or large, using categories you create or a kit such as Freedom Filer. The box doesn’t have to be their permanent container; they may already have a filing cabinet or one may be needed once all their papers are gathered.

Basic categories include:

  • Career
  • Health
  • Insurance
  • Finances
  • Personal
  • Resources
  • Vital Documents (passport, birth certificate, marriage certificate, etc.)
  • Taxes

Give your loved ones a head start on the challenges of paper management. A gift certificate to a professional organizer to help them integrate their papers into the system and further customize would be icing on the cake!

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Filed under Decluttering, Empty Nest, Paper, paper organizing, Products, professional organizer, School, Storage, Strategies, Wedding

Organize Home Receipts Now For Big Bucks Later

plans

Don’t just save the plans after a remodel – save receipts too!

Sheila is 85 years old and has decided to downsize into a retirement community. Her house is worth a whole lot more than what she paid for it 60 years ago. Let’s say she paid $25K and is able to sell the house for $625K. That means she may have to pay taxes on as much as $600K profit – or gain (minus a $250K exclusion the IRS grants).

Sheila’s accountant tells her she could pay significantly less taxes because she can add the costs of various improvements she made over the years of ownership to the base amount she paid for the house. This is called increasing the cost basis of the home. But where is the documentation?

This is where being organized comes in handy. With a simple system, homeowners can preserve the records of improvements they have made to their property. When the house sells and the accountant is asking for ways to reduce your tax burden, the seller can produce the receipts and records which could save them thousands. Selling the family home and moving is stressful enough without adding last minute scramble to dig up old documentation.

The simplest system is a single file drawer or filing tub to hold all the purchase and improvement related documents. From there you can get more organized if you desire by separating different types of documents into different folders. If you’re planning a full remodel or major improvement it is helpful to keep all the permits, contracts, inspections, receipts and invoices together labeled by the name of the project.

Here is specific info from the IRS’s publication, Pub 523 – Selling Your Home, which outlines what qualifies as a cost basis improvement

Improvements

These add to the value of your home, prolong its useful life, or adapt it to new uses. You add the cost of additions and improvements to the basis of your property.

The following chart lists some examples of improvements.

home improvements chart

Repairs done as part of larger project.   You can include repair-type work if it is done as part of an extensive remodeling or restoration job. For example, replacing broken windowpanes is a repair, but replacing the same window as part of a project of replacing all the windows in your home counts as an improvement.

Examples of improvements you CANNOT include in your basis.

  • Any costs of repairs or maintenance that are necessary to keeping your home in good condition but do not add to its value or prolong its life. Examples include painting (interior or exterior), fixing leaks, filling holes or cracks, or replacing broken hardware.
  • Any costs of any improvements that are no longer part of your home (for example, wall-to-wall carpeting that you installed but later replaced).
  • Any costs of any improvements whose life expectancy, when installed, was less than 1 year.

Exception.   The entire job is considered an improvement if items that would otherwise be considered repairs are done as part of an extensive remodeling or restoration of your home. For example, if you have a casualty and your home is damaged, increase your basis by the amount you spend on repairs that restore the property to its pre-casualty condition.

Obviously everyone’s tax situation is unique and there are other variables that can affect the picture, even year-to-year. We are simplifying for the point of illustration.

So no matter when you bought your home, now is the time to gather up all the house related receipts and start keeping any original improvement receipts. If you neglected to keep them, at least make a list of known improvements and try to estimate what you spent.

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