The Importance of Keeping Records For Tax Filing

Tuesday, July 13, 2010, 10:56 AM | 1 Comment

Just to remind you that, before you know it, tax season will be upon us. This is probably the best time to start keeping records for your next-year taxes if you are already not doing it. If you have lost some records, you have probably misplaced them in your home.

Give it some time now to locate them while you are not under pressure of meeting the deadline for tax filing.

Keep your household inventory that lists your taxable assets, their value and your tax cost – basis – in them. Not only for taxes next year, but you may also need it to make an insurance claim or to take a casualty or theft-loss deduction for losses that are not insured.

  • The story goes…

    A woman in early 2000s suffered the loss of valuable jewelry and silver coins that she had inherited, but she had no inventory of the stolen items or of their value when she inherited them. So she could not support her loss deduction when it was challenged by the IRS.

  • The case came to Tax Court…

    The Tax Court was convinced by police reports that a serious theft had occurred. It allowed the deduction but only half the size of the one the woman had claimed.

  • Important tax records to keep

    • Investment costs, earnings and sales including reinvested dividends.
    • Capital gains and losses.
    • Charitable donations.
    • Tax-free interest on state and local bonds.
    • Mortgage and home-equity loan interest.
    • Home purchase and home-improvement expenses.
    • Job-related expenses.
    • Home office expenses.
    • Self-employment income and expenses.
    • IRA contributions and withdrawals.
    • Carryovers of items from prior years. For example, capital losses, investment interest and charitable contributions.

In a Nutshell
Make it a habit to save all receipts and all your records in a safe place at home. Make sure to remember where that safe place is. It’s a good thing to start doing it now when you are under no pressure to meet the deadline for tax filing.

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  1. One Response to “The Importance of Keeping Records For Tax Filing”

  2. By Chiexia on Aug 3, 2010, 6:56 am | Reply

    Many thanks very much for that information. I have been looking for this for a while with Bing and it has been a true task Moving to Honolulu.

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