Tax Tips: Papers to Save for Your Tax Return

Posted on May 3, 2016

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These Tax Tips Will Keep You Organized and Ready for Your Accountant

tax tipsHow many times have you cleaned out a drawer and encountered a large stack of receipts with a dubious eye? How do you know whether you need to sort and keep them stashed in a file, or if you can toss them in the trash with abandon? You might have the same unsettled feeling when you shred utility bills or try to determine how long you might need to keep copies of prior tax returns. For tax tips about organizing certain records and what you need to keep, read on.

If you keep your records organized, you’ll go to meet with your accountant with a better idea of where you stand, and you’ll avoid making follow-up calls to their office to keep updating your expenses or other information. Here is a quick list of tax tips on how to organize your papers for easy reference:

Receipts: Set aside a part of an expandable file for receipts. Make it a habit to note on the receipt what the purchase was for, so that you don’t miss any important business deductions on your tax return. If you separate out your receipts by month, you’ll be even more ready and organized for tax time.

Utility bills: If you work from home, you’ll want to keep records of the utility bills you’ve paid. If you pay online, you’ll have an easy way to print out a record of your expenses that can be deducted on your tax return. Keep in mind, though, that your home office space must be used exclusively for business.

Credit card statements: If you can, get a company card that you use solely for business purposes, and avoid the use of cash for your business. This way, you’ll have an easy way to track your expenses for your company versus your household purchases. If you fail to list your expenses on your tax return, you’ll inflate your income and end up paying more in taxes.

Donations: If you or your company makes charitable donations, don’t forget to obtain a receipt or a statement that shows your donation. These deductions reduce the amount of taxable income and lower your tax bill.

Improvements or major purchases: Be sure to keep the records of any improvements you make to your business property or big purchases that are necessary for the operation of your business. These may be deducted on your tax return, or you may be able to deduct depreciation on major expenses. Also, if you install an item that improves energy savings, you may be eligible for a tax credit.

At AccuBiz, Bert Doerhoff, CPA, works with small- to mid-size companies that are looking for ways to streamline their bookkeeping and accounting tasks with accurate record-keeping and improved tax savings. For more tax tips and business insights, contact AccuBiz for an appointment.

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Posted in: Bookkeeping