Organize Your Income Tax Records neatly

RSS Author RSS     Views:N/A
Bookmark and Share          Republish
Before even beginning to organize your tax records, be aware that the Internal Revenue Service recommends hanging on to them for three to seven years, depending on your personal situation. There are some records you might want to keep longer like records on appreciable assets. For the most part, if you file your returns consistently, you can get rid of old tax records that go beyond three years.

Your W-2, W-4, 1099 forms, brokerage transaction records, union dues, alimony you received or paid, charitable donations, child care payments, college expenses for you or your dependents, mortgage interest records, state and local tax records, real estate tax records, and real estate closing statements are all valuable tax records that need to be organized. You should store them in a safe place and hang onto them at least three years, maybe a little longer for extra precaution.

As far as keeping receipts goes, it is better to have more than to have less. If you itemize deductions, you want to have your receipts readily available as proof of your deductions. If storing receipts in file folders is a problem, scan them into your computer. Just put them away in a box in case you ever need to get to the originals for some reason.


Designate a place to keep all of your tax records. You want to have a neat place to store these documents. If you can store them in some sort of fireproof box or set of filing cabinets, this would be best. In any case, keep them somewhere reasonably handy in case you need to refer to them for any sort of verification, or in the event of an Internal Revenue Service audit or investigation.

It is also highly advisable to develop an organized file system for your tax records. The easiest way to do this is to file your returns, W-2s, W-4s, 1099s, receipts, and records by year. In the invent of an Internal Revenue Service audit or investigation, they will most likely be referring to the information they want based on specific tax years. Make whatever might come up as easy as possible to deal with by keeping your records highly organized.

When it is time to file your income tax return, you may want to consider hiring a professional to prepare your income taxes for you. If you do, however, decide to file your own return, consider using a software program that will help you prepare your taxes step by step. Intuit Turbo Tax Deluxe is a good example of such software. Just follow the prompts and enter the information provided from your well-organized tax files.


Report this article
Occupation: Tax consultant
Chintamani Abhyankar, is a well known expert in the field of finance and taxation for last 25 years. He has written many books explaining inside secrets of the magic world of personal finance. His famous Tax eBook “Stop donating your money to IRS” which is now running in its second edition, provides intricate knowledge and valuable tips on personal finance and income tax.

Bookmark and Share
Republish



Ask a Question about this Article