Keeping Good Records Reduces Stress at Tax Time
Friday, January 30, 2015, 6:00 PM | Leave Comment
You may not be thinking about your tax return right now, but pretty soon you will be sweating all over looking for receipts and other types of records you would need to file your taxes.
Now is a great time to start planning for next year and to make sure your records are organized.
Do it now while you still have time and are not in a big hurry.
Filing tax returns, for some, is like going to the dentist. If you have flossed once a day and brushed twice a day regularly, then going to the dentist should be a breeze and not something to dread upon.
Similarly, maintaining good records now can make filing your return a lot easier and it will help you remember transactions you made during the year. That’s one way to reduce stress at tax time.
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PERSONAL Records
Individual taxpayers should generally keep the following records supporting items on their tax returns for at least three years:
- Bills
- Credit card and other receipts
- Invoices
- Mileage logs
- Canceled, imaged or substitute checks or any other proof of payment
- Any other records to support deductions or credits you claim on your return
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PROPERTY Records
You should normally keep records relating to property until at least three years after you sell or otherwise dispose of the property. Examples include:
- A home purchase or improvement
- Stocks and other investments
- Individual Retirement Arrangement transactions
- Rental property records
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BUSINESS Records
If you are a small business owner, you must keep all your employment tax records for at least four years after the tax becomes due or is paid, whichever is later.
Examples of important documents business owners should keep Include:
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Gross receipts: Cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099-MISC.
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Proof of purchases: Canceled checks, cash register tape receipts, credit card sales slips and invoices.
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Expense documents: Canceled checks, cash register tapes, account statements, credit card sales slips, invoices and petty cash slips for small cash payments.
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Documents to verify your assets: Purchase and sales invoices, real estate closing statements and canceled checks.
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In case your return is selected for examination
Keeping well-organized records also ensures you can answer questions if your return is selected for examination or prepare a response if you receive an IRS notice.
In most cases, the IRS does not require you to keep records in any special manner.
Generally speaking, you should keep any and all documents that may have an impact on your federal tax return.
In a Nutshell
TaxACT Free Federal and Deluxe Editions include both Schedule A and all the necessary forms you need.
You can also use any of these tax software to help you do your taxes.
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