Everyone knows April 15th can be a very stressful time (for you and your accountant). Organizing paperwork for taxes can be overwhelming, but if you keep your supporting documents separated throughout the year, completing your return can be easier and less stressful.
Following these steps can make tax time less stressful:
Tax forms and paperwork
As you receive various forms, receipts and financial reports from banks, investments and lenders, keep them separated by category so you can find the information easily.
Sort tax forms and paperwork
Use the tax organizer we send out (or your accountant might send out if you have one) as a guide from last year’s tax return for current year tax paperwork. Most tax forms will fall under the following categories: income, deductions and expenses:
Types of income include:
• W-2 - Wages
• Form 1099 – Investment income (interest, dividends and capital gains / losses)
• Social Security benefits
• IRA and pension distributions
• Unemployment benefits
• Rental income
Common deductions are:
• Mortgage interest
• Real estate taxes paid
• Charitable contributions
Important expenses to keep track of are:
• Education expenses
• Child care expenses
• Contributions to IRAs
How long do you need to keep your tax returns and records? According to the IRS website:
The length of time you should keep a document depends on the action, expense, or event the document records. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out.
Please visit the below link on our website for a retention schedule:
If you have any questions, please give us a call.