Tips to Make Tax Filing Easier
When it comes time to file taxes, you’ll be much less stressed out if everything is organized and easy to find. The best way to achieve this is to devise a recordkeeping system that will make tax preparation easier when the time comes. While most people these days do their recordkeeping electronically, this isn’t always enough. You’ll need physical documents as proof of contributions you’ve made to charity and any taxes you’ve paid on the real estate you own.
But it isn’t only money you’ve spent that needs to be documented for the purposes of tax preparation, it’s also the money you may have earned from the selling of bonds, mutual funds, or stocks. Keep records that prove how much you bought and sold stocks for, and any dividends or commissions as well. In addition, hold onto all of your pay stubs so that you have proof of income.
Records Commonly Kept
There are certain records that everyone needs to keep so that tax preparation is easier. They include invoices, sales slips, 1099 and W2 forms, receipts for credit cards, bank statements, and canceled checks. If you own your own home you should also keep a copy of the closing paperwork, along with insurance and sales records.
How Long To Keep Them
In general, it’s best to keep tax records for the previous three years, as the law states you should. But to be on the safe side, you should keep all of the tax records you have. Your 1099s and W2s should be saved electronically, but you should also have physical copies of all of them. The more proof of earnings you have the easier it will be to apply for benefits later in life, such as social security.
If the IRS audits you, they will be able to provide you with information for the previous six years of tax returns. The more tax records you are able to access, the easier it is to make it through an audit. The best way to be prepared is to have all of your paperwork saved in file folders and stored in a fire and waterproof safe. For more tips on tax preparation, please contact our offices.