Keeping Good Tax Records

Would you be ready in a tax emergency? Well–organized records not only help you prepare your tax return, but they also help you answer questions if your return is selected for examination or prepare a response if you are billed for additional taxes. Fortunately, you don't have to keep all tax records around forever. 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. If you are an employer, your employment tax records must be kept for at least four years after the tax becomes due or is paid, whichever is later. If you are in business, there is no particular method of bookkeeping that must be used. However, you must clearly and accurately show your gross income and expenses and ensure that your records substantiate both these items. If you need help in setting up your recordkeeping system, please give us a call.

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