Keeping Good Records Reduces
Stress at Tax Time
Although most people won’t be filing their tax returns for
several months, the dog days of summer are actually a great time to start
planning for the tax filing season by ensuring your records are
organized. Whether you are an individual taxpayer or a business
owner, you can avoid headaches at tax time with good records because they
will help you remember transactions you made during the year.
Here are a few
things the IRS wants you to know about recordkeeping.
well-organized records also ensures you can answer questions if your
return is selected for examination or prepare a response if you are billed
for additional tax. In most cases, the IRS does not require you to keep
records in any special manner. Generally speaking, you should keep any and
all documents that may have an impact on your federal tax return.
taxpayers should usually keep the following records supporting items on
their tax returns for at least three years:
- Credit card
and other receipts
- Mileage logs
imaged or substitute checks or any other proof of payment
- Any other
records to support deductions or credits you claim on your return
normally keep records relating to property until at least three years
after you sell or otherwise dispose of the property. Examples include:
- A home
purchase or improvement
- Stocks and
Retirement Arrangement transactions
If you are a
small business owner, you must keep all your employment tax records for at
least four years after the tax becomes due or is paid, whichever is later.
Examples of important documents business owners should keep Include:
receipts: Cash register tapes, bank deposit slips, receipt books,
invoices, credit card charge slips and Forms 1099-MISC
- Proof of
purchases: Canceled checks, cash register tape receipts, credit card
sales slips and invoices
documents: Canceled checks, cash register tapes, account statements,
credit card sales slips, invoices and petty cash slips for small cash
- Documents to
verify your assets: Purchase and sales invoices, real estate closing
statements and canceled checks
information about recordkeeping, check out IRS Publications 552,
Recordkeeping for Individuals, 583, Starting a Business and Keeping
Records, and Publication 463, Travel, Entertainment, Gift, and Car
Expenses. These publications are available on the IRS Web site, IRS.gov or
by calling 800-TAX-FORM (800-829-3676).
Ten Tips for Taxpayers Making
year, millions of taxpayers itemize their deductions on their federal tax
return. One of the most common itemized deductions is a donation made to a
Here are the top
ten things the IRS wants every taxpayer to know before deducting
contributions must be made to qualified organizations to be deductible.
You can ask any organization whether it is a qualified organization and
most will be able to tell you. You can also check IRS Publication 78,
which lists most qualified organizations. IRS Publication 78 is
available at IRS.gov.
contributions are deductible only if you itemize deductions using Form
1040, Schedule A.
- You generally
can deduct your cash contributions and the fair market value of most
property you donate to a qualified organization. Special rules apply to
several types of donated property, including clothing or household
items, cars and boats.
- If your
contribution entitles you to receive merchandise, goods, or services in
return – such as admission to a charity banquet or sporting event – you
can deduct only the amount that exceeds the fair market value of the
- Be sure to
keep good records of any contribution you make, regardless of the
amount. For any contribution made in cash, you must maintain a record of
the contribution such as a bank record – including a cancelled check or
a bank or credit card statement – a written record from the charity
containing the date and amount of the contribution and the donor’s name,
or a payroll deduction record.
contributions actually made during the tax year are deductible. For
example, if you pledged $500 in September but paid the charity only $200
by Dec. 31, your deduction would be $200.
- Include credit
card charges and payments by check in the year they are given to the
charity, even though you may not pay the credit card bill or have your
bank account debited until the next year.
- For any
contribution of $250 or more, you must have written acknowledgment from
the organization to substantiate your donation. This written proof must
include the amount of cash and a description of any property you
contributed, and whether the organization provided any goods or services
in exchange for the gift.
- To deduct
charitable contributions of items valued at $500 or more you must
complete a Form 8283, Noncash Charitable Contributions, and attached the
form to your return.
- An appraisal
generally must be obtained if you claim a deduction for a contribution
of noncash property worth more than $5,000. In that case, you must also
fill out Section B of Form 8283 and attach the form to your return.
information see IRS Publication 526, Charitable Contributions, and for
information on determining value, refer to Publication 561, Determining
the Value of Donated Property. These publications are available on the IRS
Web site, IRS.gov or by calling 800-TAX-FORM (800-829-3676).