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Tax Records People Need To Keep

December 22, 2017

 

Well-organized records make it easier to prepare a tax return and help provide answers if your return is selected for examination or if you receive an IRS notice. You must keep records, such as receipts, canceled checks, and other documents supporting an item of income, a deduction, a credit appearing on a return, etc. Here are the list of a handful of tips.

 

1. Go paperless with online bank account statements - perhaps even copies of cancelled checks and deposit records

 

2. Gather all credit card statements – may encompass categorized summaries of your purchases

 

3. Download online mortgage and loan data or make a phone call with the lender’s computer

 

4. PayPal and most shopping cart applications allow people to export receipts and payments in a variety of formats, including QuickBooks. Thus, it is easy to generate meaningful accounting reports.

 

5. Brokerages and agents provide profit and loss, summaries, or details reports that can be directly imported in plenty of tax software, or used in your tax return.

 

6. If you have employees, you must keep all employment tax records for at least 4 years after the tax becomes due or is paid. For more information, see Publication 15, (Circular E), Employer's Tax Guide. Missing W-2s and 1099s? Just file an extension and get the printouts from the IRS in May. All you need is a Form 4506-T to get them all free.

 

7. Traveling a lot? Much of that information is recorded on credit card statements; however, if you use a particular travel site regularly, print out purchases and itinerary for the year.

 

8. Paying for regular tolls or travel passes? Almost every state and local transportation, and highway agencies have records online, but download the information early in the year because they may not keep files past the end of March.

 

9. Regarding large charitable contributions to religious institutions, they all send out annual statements summarizing your donations. If you don’t get one or online downloading is unavailable, you will need to contact them promptly.

 

10. You should keep records of your own and your family members' health care insurance coverage, including records of employer-provided coverage or premiums paid and type of coverage for private coverage. If you're claiming the premium tax credit, you'll need information about any advance credit payments received through the Health Insurance Marketplace, the premiums paid, and the type of coverage obtained at the Marketplace. If you or any of your family members are exempt from minimum essential coverage, retain certificates of exemption to support your tax return.

 

11. Remember to contact doctors, or pharmacies for printouts of payments. Your insurance company may also have records of costs they did not reimburse. This will save time sorting through all those medical receipts.

 

12. If you're in business, there's no compulsory method of bookkeeping; however, people must use a clear and accurate method substantiating the true of financial statements.

 

Now it’s time to pore through your check register, drawer, or bag of receipts to see any receipts related to all the relevant expenses. Yes, this can take time, but take a deep breath…slowly and do the task carefully. If so, you’ll be able to file your tax return early and grab that refund!

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