While April seems like a long way away, you can start doing something today to make filing tax returns next year a breeze. Well–organized financial records not only help you prepare your tax return, but they also help you answer questions if your return is selected for examination or prepare a response if you are billed for additional tax.
Here are a few things to consider when organizing your records:
- Tax records should be kept for three years, but other documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.
- If you're an employer, keep all of your employment tax records for at least four years after the tax becomes due or is paid, whichever is later.
- If you're in business, you don't need to use any particular method of bookkeeping. However, you must clearly and accurately show your gross income and expenses. The records should support both your income and expenses.
The following helpful publications can be downloaded from IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676):
- Publication 552, Recordkeeping for Individuals, provides more detailed information on individual record keeping requirements.
- Publication 583, Starting a Business and Keeping Records; and
- Publication 463, Travel, Entertainment, Gift, and Car Expenses, provide additional information on required documentation for taxpayers with business expenses.
Actually, there's tons of free tax information on the IRS website, IRS.gov. It’s not just about recordkeeping. Individuals and businesses can find answers to almost any question about federal taxes on the web site. Helpful links found at the top of the home page will take you directly to topics centered on Individuals, Businesses, Charities and Non-Profits, Government Entities, Tax Professionals, the Retirement Plan Community and Tax Exempt Bonds.
In addition to the latest news coming from the IRS, the homepage can lead you to statistics, news releases and tax tips, local IRS offices, the Taxpayer Advocate Service, and thousands of IRS forms and publications. Frequently asked questions and answers are available or you can use two separate search icons: one by keyword and one by answering “I need to . . .”
Why wait? Now is the perfect time to visit IRS.gov.
« Return to "Tax Planning"
