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Recordkeeping Advice From the IRS Plan Now for Upcoming Tax Season
Next year's tax season is only a few months away, and the Internal Revenue Service always encourages taxpayers to take the time beforehand to gather and organize their tax records to reduce stress at tax time. "You can avoid headaches at tax time by keeping track of your receipts and other records throughout the year, and Fall is a good time to start organizing your tax records before the crush of the holiday season," said IRS New York spokeswoman, Dianne Besunder. "Good recordkeeping can save a lot of time and effort when completing your return."
The Internal Revenue Service expects to receive about 8.8 million tax returns from New York State filers during the upcoming 2008 tax season. About 39% of New York State taxpayers claim itemized deductions such as state and real estate taxes, home mortgage interest, medical expenses, and charitable contributions. Good recordkeeping can help avoid a missed deduction when tax season arrives.
Generally, the IRS does not require you to keep records in any special manner. You should, however, keep any and all documents that may have an impact on your federal tax return. Such items would include bills, receipts, invoices, mileage logs, canceled checks, or any other proof of payment, and any other records to support deductions or credits you claim on your tax return.
Besunder stressed that good record-keeping habits can have a positive impact on your business as well. "You need meaningful records to watch the development of your business. Records can show whether your business is improving, which items are selling, or what changes you need to make. Keeping thorough, accurate records can only increase the chances of business success."
Also, if you hire a paid tax professional to complete your return, the records you have kept will assist the preparer to complete your return quickly and accurately. During the tax season about 67 percent of New York State filers are expected to use a paid tax professional to prepare their tax returns.
Generally, tax records should be kept for three years, but some documents- for example, records relating to a home purchase or sale, stock transactions, Individual Retirement Accounts, and business or rental property- should be kept longer.
For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available on IRS.gov or by calling 1-800-TAXFORM (1-800-829-3676).
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