If you don’t want to spend your summer thinking about your taxes, we don’t blame you. But tax planning should happen all year long, not just the week before your filing deadline. An important part of your planning is recordkeeping. – Even during the summer, keeping track of your records makes it easier to prepare your tax return. In addition, it can also be helpful to provide clear answers if you get selected for examination or receive an IRS notice.
Here are some helpful tips to help you keep good records:
- Develop a system that keeps all important info together. There are a variety of software programs to use to keep track of records. If you prefer an old school approach, try keeping clearly marked folders for your paper documents.
- Add tax records throughout the year to your files as you receive them. Having these records readily at hand makes preparing a tax return much easier.
- Records you should be keeping include receipts, canceled checks, and other documents that support income, a deduction, or a credit on a tax return. – You should also be keeping records relating to property you dispose of or sell to figure your basis for computing gain or loss.
In general, the IRS suggests keeping records for three years from the date they filed the return.
Business owners should also find a method that clearly and accurately reflects your gross income and expenses. In addition, if you have employees, you should be keeping all employment tax records for at least four years after the tax is due or paid, whichever is later.
Have questions? Our expert team of US and Israel tax professionals are always here to help you. Contact us with any questions you have.