How to be Better Prepared for Tax Season Next Year
by Jacquie Ross
If you find yourself running around in a panic at the last minute due to not having a system in place for your taxes, then resolve to begin a new system starting today. Here are some basic tips from the IRS for individuals filing returns.
You can avoid headaches at tax time by keeping track of your receipts and other records throughout the year. Good recordkeeping will help you remember the various transactions you made during the year, which in turn may make filing your return a less taxing experience.
Records help you document the deductions you’ve claimed on your return. You’ll need this documentation should the IRS select your return for examination. Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.
In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return:
• Credit card and other receipts
• 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.
Good recordkeeping throughout the year saves you time and effort at tax time when organizing and completing your return. If you hire a paid professional to complete your return, the records you have kept will assist the preparer in quickly and accurately completing your return.
For businesses, please visit the IRS website at www.IRS.gov for information on what business expenses are deductible and check again later in the year, since the rules may have changed. Avoid waiting until the last minute. Remember that having an organized system in place for your tax records will relieve stress and keep you out of trouble!