Tax season recordkeeping

Tax season is underway, and we have some tips for recordkeeping. You should keep track of and store your tax and other financial records to avoid delays as the filing deadline approaches. Records may include W-2 forms, canceled checks, certain receipts, and previous year returns.

Common documents

These are the documents our clients most often need for their taxes.¹

• Pay stubs
• Mortgage payment records (Form 1098)
• Receipts for items or services you may want to claim as itemized deductions
• Records on charitable giving and donations
• Credit card and bank statements to verify deductions
• Medical bills (if you itemize)
• 1099 forms for dividends or other income

Get organized

Find a place to store your tax documents until it’s time to prepare to file, such as in a file box or folder. A good record-keeping system may alleviate concerns later as the deadline gets closer.

If you have your documents or prior-year returns stored on your computer, make sure you back them up or store them in a secured location.

How Long?

The I.R.S. provides recommended timelines for retaining financial documents²:

• 7 Years if you claimed a loss from worthless securities or a bad-debt deduction
• 6 Years if you failed to report income that you should have, and the income was more than 25% of the gross income listed on your return
• 4 Years for employment related tax records
• For all other tax records, it’s 3 Years

Looking ahead to 2020

As you gather documents for tax year 2019, also look ahead to 2020. The IRS encourages a paycheck checkup to determine how much federal tax should be withheld for taxes. The calculator leads you through various screens that require you to enter requested numbers into boxes. The calculator looks similar to a tax-filing form.

Once the calculator generates the estimated taxes, which you’ll either owe or be refunded, it offers suggestions on how to change your withholding amount or request to get additional money withheld from your check.

To avoid headaches, mark your calendar for the upcoming key tax dates:

If you have questions regarding this information or anything else related to financial planning, please don’t hesitate to reach out to a Kaizen Advisor.

This Special Report is not intended as a guide for the preparation of tax returns. The information contained herein is general in nature and is not intended to be, and should not be construed as, legal, accounting or tax advice or opinion. No information herein was intended or written to be used by readers for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. Readers are cautioned that this material may not be applicable to, or suitable for, their specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. Readers are encouraged to consult with professional advisors for advice concerning specific matters before making any decision. Both «representativename» and MarketingPro, Inc. disclaim any responsibility for positions taken by taxpayers in their individual cases or for any misunderstanding on the part of readers. Neither «representativename» nor MarketingPro, Inc. assume any obligation to inform readers of any changes in tax laws or other factors that could affect the information contained herein.

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Citations.

1 - efile.com/tax-return-preparation-checklist/

2 - irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records