During the summer or fall you’re probably not thinking much about taxes but you should. Their are probably expenses you paid this year that will effect your taxes. Don’t wait until January or February to start thinking about your tax records. Make it easier on yourself (and on your CPA) by keeping the proper records so you have them available for preparation of your tax return.
It’s good practice to keep all tax records organized and save them for your tax preparer and in case you need to support any deductions or credits at a later date.
Here are a few some common sense tips for tax recordkeeping:
Save Your Tax Returns:
Include copies of your filed tax returns with your tax records. You may need information in them to help prepare future tax returns, and you will need them if you need to amend a tax return. You might also need copies if you apply for a home loan or refinance.
Save Your Records:
The IRS requires you to save records to support income and deductions reported on your tax returns. You should keep the basic tax records for at least 3 years which may include W-2, K-1 Forms, 1099 Forms, applicable credit card receipts, bank statements, cancelled checks & other proofs of payment, and mileage logs.
Homes & Investment Property:
You should save records related to the purchase of your home and any major improvements that would increase your basis. These records can be important if you convert your primary residence to a rental property, or when you later sell your home. You should save these records for at least 3 years after selling the property.
Business Owners:
You should keep all records that support your total receipts and those that support your expenses and asset purchases. These records would include bank deposit slips, receipts, and invoices. You should also save business credit card receipts, sales slips, canceled checks, account statements and petty cash slips. Keeping a good set of books and accounting files will always make your job much easier and reduce the risk of reporting incorrect figures on your tax returns.
Employees:
If you have a business with employees, you should save all employment-related records for at least four years after the tax return was filed, or tax was paid, whichever is later.
Record Format:
The IRS does not require a particular method to keep records, but your CPA can help you keep yours organized. In any case, develop some type of consistent record keeping system for your business or tax returns. This will more easily help you file more accurate tax returns and support tax filings if the IRS asks you for more information.
We can help. If you are filing individual or small business tax returns and have questions about accounting, tax, or general record keeping, please contact us by calling 314-984-9829 or emailing Steve Scott at info@scottcpa.com.