3 Tips for Tax Record-Keeping
Tagged Under : accounting professional, Daniel Stoica, IRS, record-keeping, Tax, tax professional, taxpayers
Many taxpayers may not be thinking about their taxes this time of year, but the summer is the best time to start planning for next year. If you keep your financial statements and other important documents organized and safe, it will make your tax preparations that much easier, and, if you receive a letter from the IRS, you would stress over trying to find the right paperwork.
The IRS has a few helpful hints regarding record keeping.
1. The IRS won’t require you to keep your records in any certain order, but you should keep all documents that could affect your taxes. You should keep them in a safe place, and keep them together.
2. Taxpayers should keep the following records for the last three tax years:
- Bills
- Credit card and miscellaneous receipts
- Invoices
- Mileage logs
- Cancelled, imaged or substitute checks or any other proof of payment
- Any other records to support deductions or credits you claim on your return
Taxpayers should keep records that relate to their property for at least 3 years after they sell the property. Some examples are:
- A home purchase or home improvement
- Stocks and other investments
- Individual Retirement Arrangement transactions
- Rental property records
3. For small business owners, keep all of your employment tax records for no less than 4 years after they are due or paid. These documents would be:
- Gross receipts: Cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099-MISC
- Proof of purchases: Cancelled checks, cash register tape receipts, credit card slips and invoices
- Expense documents: Cancelled checks, cash register tapes, account statements, credit card sales slips, invoices and petty cash slips for small cash payments
- Documents to verify your assets: Purchase and sales invoices, real estate closing statements and cancelled checks
Look at IRS Publication 552, Record Keeping for Individuals, Publication 583, Starting a Business and Keeping Records, or Publication 463, Travel, Entertainment, Gift and Car Expenses. You can find these publications at irs.gov or by calling 800-829-3676.
