Spring Cleaning

Tax season is complete.  Or is it?  Really, tax season is NEVER complete.  You may file your taxes on (or before) April 15 annually, but you’re filing for the previous year.  A wise person’s recordkeeping has already begun for the current year.  In case you’re a little behind the curve on organizing your information, here are a few helpful hints regarding what to keep, how long to keep it, etc. so you can be better prepared for filing future returns. 

The purpose of this article isn’t to tell you how to organize your information; there are as many systems as there are people.  As long as you organize your records regularly (no, this does not mean throwing all receipts in one big box, no matter what the receipt is for) your tax life will be much smoother.  What’s important is to know “what to keep” and “how long to keep it.”

What To Retain

Here are the things you should keep track of:

• Personal property taxes
• Real estate taxes
• Home mortgage interest
• Gifts to charity – be certain to get receipts from the organization
• Volunteer expenses – miles and out of pocket expenses
• Unreimbursed Employee Expenses
•           Tools
•           Uniforms
•           Dues
•           Subscriptions
• Unreimbursed Medical Expenses
•           Health insurance premiums you paid
•           Prescriptions
•           Vision care (glasses/contacts)
•           Dental care
•           Hospital bills you paid out of pocket
•           Long term care insurance premiums
• Educational expenses
• Daycare receipts
• IRA contributions
• Stock transactions
• Tax preparation fees

How Long To Retain Records

Records to keep forever:

Prior years tax returns, and their supporting documentation (W2, 1099).  You may never need them, but do you want to be audited for a return from 10 years ago and not have ANY of your paperwork?  Not even the return itself?  Here’s the point to understand: there is no statute of limitations when a return is fraudulent or when no return is filed.  So, if the IRS comes to the conclusion that they never received that return from 1991 – there is limit on your liability.  You need to be able to prove that you filed it!

Sold your house or other property?  Keep the closing statement forever.

Records to keep for at least six years

• Cancelled checks (for tax related items)
• Financial statements
• Mortgage statements
• Receipts for items you’ve claimed on your return
• Credit Card statements (that show purchases of items you’ve claimed on your return)
  

Records to keep for at least three years

• Bank statements

If you have an item that is not included in the list above, or you have a question about one of our suggestions, feel free to contact your local PRO-TAX office to get some Tax Spring Cleaning help.

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