Thursday, May 15, 2008

Simplify your life: Organize your tax records


Did you spend hours pulling together your tax records
in preparation for filing your 2007 tax return? It
doesn't have to be that way. Avoid the problem next
year by taking a few simple steps now.


FIRST, DECIDE WHAT RECORDS...you need to keep for the current year. Generally speaking, you'll need records of income items and deductible expenses. Use your 2007 tax return as a guide.

* YOU'LL ALSO NEED TO KEEP SOME ITEMS for longer
periods. For example, you may need purchase records
for your house and other investments years later to
calculate your capital gains.



* SET UP A FILING PLACE for each category. Use folders
or plastic pouches for paper records, such as
charitable receipts, property tax payments, and
mortgage reports.


* IF YOU MANAGE YOUR BANKING AND FINANCES ONLINE,

open up a series of folders on your hard drive. Save
copies of electronic statements or transaction
receipts in the relevant folder. Remember to make
regular data backups.

* THEN STAY CURRENT with your records as you go through
the year. It's easier to spend a few minutes each
month than to have to spend hours reconstructing
everything at the end of twelve months.

* AT THE END OF EACH MONTH, highlight income and deduction items in your check register. Use one color for charitable contributions, another for work
expenses, and so on. You can do this whether you keep your register on paper or on a computer. Make sure any associated receipts are filed away correctly.

* AT YEAR-END, you should know exactly what falls into
each category and where the records are.



Remember, the better your recordkeeping, the better your
chances of maximizing tax breaks. If you have questions
about the records you need to keep, give us a call.

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