It’s never too early to organize your tax records. Though it may seem so, it is sure to pay off when it comes to filing time again. Good record keeping is essential not only to stay in compliance, but also to make sure you take advantage of all your deductions and credits that you might miss otherwise.
Here are some tips to help you have a good record keeping in place:
- Records that you should keep: your W2, 1099 forms, form 1098 mortgage interest statement, property settlement statements, receipts for charitable contributions, education expenses, medical expenses, business expenses and any other documentation that supports your income and deductions.
- Develop a system to keep all your important information together. You can do so with the help of software programs available on the market. If you aren’t comfortable using them, you can still label your folders and store them in a safe place. You also have the option to scan the documentation and keep it in electronic format.
- Don’t forget to add new files to these tax records as you receive them. For year 2020 remember to include your economic impact payment documentation and unemployment compensation, if you received any. If you started a new business, make sure to keep all your receipts.
- Generally you have to keep your records for 3 years from the date you filed the return.
- If you have employees keep your employment tax records for at least 4 years after the tax is due or paid whichever is later.
- If you or a family member had a legal name change, you should notify the social security administration to avoid a delay in processing your tax return.
A little organization now, can go a long way later.
If you need help with your taxes, give us a call or send us an email.