Consider creating separate file folders for documents that you may need long-term, such as home purchases and improvement documents, Federal and State taxes, and business records. You should regularly back up your computer files or documents by copying them to a CD-DVD, Flash Drive, or hard disk drive. Another option would be to print out a hard copy of this information quarterly or annually. All critical or important information should be stored in a secure location, outside your home or business, or in a fireproof safe.
Expenses such as automobile deductions, cell phone deductions, computer usages or travel and entertainment expenses require that a log or journal be kept showing expenses and purpose. For automobile, you need to track mileage, trip dates, locations and the business purposes of the trip.
Original receipts are always best, to verify the purchase or expenses included on your tax return. If the original receipt is lost you could use your cancel checks, credit card slips, or credit card statements for additional proof or reference. Do not falsify or forge documents.
To be safe and secure with today’s constant changes in the tax law and regulations, plus verification for social security payments, keep Federal and State taxes indefinitely. You can be audited up to three years after the tax return due date or three years after the tax return has been filed whichever is later. So keep all receipts, records a minimum of three years after filing. Records that support business assets and depreciation needs to be kept a minimum of three years after asset is sold. Same is true with stock – three years after being sold!
If this all sounds confusing, request Debbie to manage or set-up your personal files using SmartVault