Hold On To Those Records!

First...our apologies for missing on past two weeks. We were at the National Tax Forum in Atlanta reinforcing our tax knowledge and meeting with wonderful vendors. Now, on to our regularly scheduled posting...

Although most people won’t be filing their tax returns for several months, the cool days of fall are actually a great time to start planning for the tax filing season by ensuring your records are organized. Whether you are an individual taxpayer or a business owner, you can avoid headaches at tax time with good records because they will help you remember transactions you made during the year.

Here are a few pointers to keep in mind about keeping good records:
Keeping well-organized records ensures you are able to answer questions if your return is selected for examination or prepare a response if you are billed for additional tax. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, you should keep any and all documents that may have an impact on your federal tax return.
Individual taxpayers should usually keep the following records supporting items on their tax returns for at least three years:
•Bills
•Credit card and other receipts
•Invoices
•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, i.e. charitable contributions. You must obtain and keep in your records a contemporaneous written acknowledgment from the donee organization indicating the amount of the cash donation and/or a description of any property contributed, and whether the donee organization provided any goods or services in exchange for the gift.

You should normally 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

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

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