Helpful Hints

Maintaining organized tax records offers a more efficient way to help you prepare for your tax return prepareation and potentially cost-saving means to addressing an IRS inquiry about the return in the future.

As you close the books on the calendar year and start receiving source documents from employers, financial institutions, the government and others, the beginning of the year is a great time to get organized for the upcoming tax return preparation process. Advance planning will help reduce stress for your clients once the filing deadline approaches in mid-April.

Here are some tips offered by the IRS:

• Generally, you should retain all documents that impact the tax return, and it is helpful to store the information in a central location.

• The following records should be retained by individual taxpayers for at least three years:
  • Bills, credit card and other receipts, and invoices
  • Mileage logs
  • Canceled, imaged or substitute checks, or any other proof of payment
  • Other records that support deductions or credits

• Records relating to property should be retained for at least three years after the property is sold or disposed. Examples include:
  • Homes and improvements
  • Stocks and investments
  • IRA transactions
  • Rental property

• Small business owners must keep all employment tax records for at least four years. The following documents should be retained by the small business owner:
  • Gross receipts: cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips, and Forms 1099-MISC and 1099-K.
  • Proof of purchases: canceled checks, cash register tape receipts, credit card sales slips, invoices, account statements and petty cash slips.
  • Documents to verify assets: purchase and sale invoices, real estate closing statements, and canceled checks.