You may not be thinking about your tax return right now, but before you know it the holidays will be in full swing leaving you less time to make sure you have your records in order. By taking a little time now to tidy up your documents, it’ll make completing your taxes faster later.
While the IRS does not require you to keep records in any special manner, you should keep any and all documents that may have an impact on your federal tax return for at least three years.
Whether you keep your records in a filing cabinet, shoebox or a “shoebox in the cloud,” keep them in one place. Organize your files in envelopes or folders, and label them accordingly. Also, by organizing your records by year and type of income or expense will make finding files fast and easy. Be sure to put the documents away as soon as they arrive to avoid losing them with stacks of other documents.
Keep the following supporting items on your 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
Keep records relating to property until at least three years after you sell or otherwise dispose of the property. Examples include:
- A home purchase or improvement
- Stocks and other investments
- Individual Retirement Arrangement transactions
- Rental property records
Small Business Owners
If you are a small business owner, you must keep all your employment tax records for at least four years after the tax becomes due or is paid, whichever is later. Examples of important documents business owners should keep include:
- Gross receipts: Cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099-MISC
- Proof of purchases: Canceled checks, cash register tape receipts, credit card sales slips and invoices
- Expense documents: Canceled checks, cash register tapes, account statements, credit card sales slips, invoices and petty cash slips for small cash payments
- Documents to verify your assets: Purchase and sales invoices, real estate closing statements and canceled checks
For more information about recordkeeping, check out IRS Publication 552, Recordkeeping for Individuals.
Source: IRS Tax Tips
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