The key to avoiding headaches at tax time is keeping track of your receipts and other records throughout the year. Whether you use an excel spreadsheet, an app, an online system or keep your receipts organized in a folding file organized by month, good record-keeping will help you remember the various transactions you made during the year.
Records help you document the deductions you've claimed on your return. You'll need this documentation should the IRS select your return for audit. Normally, tax records should be kept for three years, but some documents - such as records relating to a home purchase or sale, stock transactions, IRA, and business or rental property - should be kept longer.
In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return including but not limited to:
Credit card and other receipts
Canceled, imaged, or substitute checks or any other proof of payment
Any other records to support deductions or credits you claim on your return
Good record-keeping throughout the year saves you time and effort at tax time. For more information on what kinds of records you should keep or assistance on setting up a recordkeeping system that works for you, please call the office.
Mr. Maker is a certified Public Accountant and serving the South Asian community since 1993.
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