Tax day will be here soon. Will you be ready? Whether it’s your personal taxes or your business taxes there are certain records that you should keep in a safe and organized place so they are available when you need them at tax time. Do you know what records to keep and what’s okay to toss?
You should keep all records that directly support your income such as:
- Form K-1
- Bank and investments statements
Documents that support your expenses should be kept to support your deductions. Including:
- Acknowledgments of donations to charitable organizations
- Mortgage interest
- Medical deductions and medical insurance payments if you are self-employed
- Certain job related expenses
- Child care expenses
The IRS can audit you routinely for three years after you file your return. But in cases where income is under reported, they can audit for up to six years. To be safe, keep your tax records for seven years. There are certain records that you should retain even longer. This would include:
- The purchase of your home as well as any improvements you make to the home
- Investment purchases
- Dividends you have reinvested
- Any major gifts that you give or receive
- It’s also a good idea to keep your tax returns and W-2s for a while just in case you need to prove your earnings for Social Security purposes.
Having a good bookkeeping system/software will make it much easier to track of your important tax records. At Summit CPA we offer multiple resources to help you with your tax and financial planning. Contact our office at (866) 497-9761, to schedule an appointment with our advisors.