The run up to the income tax filing deadline can be a stressful time for many Americans. However, you also need to think about taxes during the rest of the year. Keep your tax documents in a safe place to make tax time less difficult.
The Internal Revenue Service recommends that taxpayers keep their tax documents, including returns and supporting documents, for three years after filing. After this time, the IRS can no longer audit the return unless it is fraudulent. As long as you have filled in the return honestly, there is no danger of getting into trouble with the tax authority if you discard the documents after three years.
In addition to your tax return, keep your income documents for three years. These documents include W-2s, 1099s, student loan documents and rental income documents. You will need these documents if you want to amend your tax return during this period. For example, you may want to claim a credit or refund on a tax return that you have completed during the past three years.
Other tax documents that you need to keep include documents that show your expenses. These could include documents related to property taxes, mortgages, student loans, health care and business expenses. For student loans, keep all documents relating to payments and interest until you have paid off the loan in full in case any dispute should arise with the loan provider. Keep mortgage-related documents until you no longer own the property. The IRS only requires you to keep health care and medical expense documentation for three years after the relevant tax return, but your insurance provider might require you to hang onto them for longer, so it's always a good idea to check with your insurer.
If you are a business owner, keep all tax documents relating to your business. Filing for businesses can be more complicated than for individuals, so it's a good idea to gather these documents together well in advance of the tax filing deadline in April. Schedule an appointment with your accountant so you have time to go through all the tax documents and make sure that everything is in order well before the deadline.
Keep your tax documents all in the same place, such as a folder in your home office. It's important to always know where to find them so you can quickly respond to a request from the IRS, a mortgage provider or any other organization.
Keeping your tax documents safe can make tax filing time less stressful, as you will always know where to find the information you need. You can also gain peace of mind from knowing that you have the documents you need in case of an IRS audit.
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