Recordkeeping for Individuals
Record keeping
is the one area that is most neglected by taxpayers, yet it is one of the
most important tools a taxpayer has to reduce payment of taxes.
It is up
to the taxpayer to keep good records to prove the allowed deductions. In
absence of records, the deductions are always disallowed.
Generally
we are required to pay taxes on all income we receive. We are allowed to
deduct certain items from that income before we calculate taxes.
Some additional
reasons for keeping good records are:
- Tax Audit
- Money Management
- Buying a Home
- Child Entering College
For the average taxpayer, record keeping will only take
a few minutes at a time. Keeping good records does not have to be burdensome.
There are many software
programs available to individuals and businesses to help keep track of income
and expenses. There are numerous ways to keep track of your income and expenses
manually as well.
Once you make a determination
as to how you are going to keep your records, you should make it a habit
to maintain your records at least once per week in the same way you keep
a daily or weekly planner for appointments and/or meetings.
By making record keeping
a habit everything can be recorded accurately while it is fresh in your mind.
Record
keeping Tips :
When filing a short
form all you have to keep is a copy of your tax return and W2s.
Some returns have more
complicated requirements. The following are some of the issues you may
encounter. (click
on a category for more details)
INCOME
ADJUSTMENTS
ITEMIZED DEDUCTIONS
CREDITS
