Friday, January 16, 2009

WHAT RECORDS SHOULD I KEEP?

Larry, I am getting ready for my tax appointment and I have all of these piles of information for 2008. That's not all, I have a storage room of boxes from years and years. Can you help me? What do I need to keep?

Irma

Irma, now is a good time to get started having organized records. You probably already keep records in your daily routine. This includes keeping receipts for purchases and recording information in your checkbook. Good record keeping will help you remember the various transactions you made during the year, which in turn may make filing your return a less taxing experience.

Good record keeping will help to "Audit Proof" your return. Records help you document the deductions you’ve claimed on your return. You’ll need this documentation should the IRS select your return for examination. 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. However, you should keep any and all documents that may have an impact on your federal tax return:
  • 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.

For more information on what kinds of records to keep, you can look at IRS Publication 552, Record keeping for Individuals, which is available on http://www.irs.gov/.

We have a detailed record retention checklist. If you would like a copy, email Carrie at ckadavy@kopsaotte.com and we will send you a free copy.

Larry Kopsa CPA