Recordkeeping, Time & Taxes—what a trio!

(Best of Celebrating Your Journey – April 6, 2007)

To all my readers: With 2019, the 14th year of my Celebrating Your Journey blog articles, “From the Heart” byline, I will be offering the “Best of the Best” articles you found helpful through the years. Many thanks to everyone who have given input and followed along w/ each month’s lifeskill—Relationships/Core Values, Time Mgt, Career/Money Mgt, Recordkeeping, Possessions, Housekeeping, Wellness, Meals, Childcare, Recreation/ Entertainment, Reflection, and Celebration. For my new readers, may these lifeskill articles offer you encouragement, insight, and commitment to seek, reach, and achieve your life dreams and goals in synergy.

With April comes our beautiful hill country spring time but also tax time. Do you feel like time and taxes are like east and west and never the twain shall get together? There just never seems to be enough time and there’s always too much of tax tension. Then throw in recordkeeping, and you have the old adage, “Two’s company but three is definitely an unwelcome crowd.”

Every year my husband and I promise each other we will prepare our tax data for our CPA before March arrives. And most every year, we don’t quite make it. In fact, we’ve had some extensions submitted on a couple occasions. Now, is that a good role model for a professional life coach?! Aren’t I supposed to have to all together, all the time? Not quite, thank you.

Well, it only proves I’m human just like the rest of ya’ll. So, I took a deep breath and put on some soothing music to slow down the hyper ventilating. Then I started to tackle the mound of numbers as I reconciled my love/hate relationship with recordkeeping. While moving through the numbers, I found ways to help my recordkeeping go more smoothly next year. I may even make my own personal March 1 deadline from now on.

The IRS has an email tax tip link you can cruise through. For now, here are some basic tips to help you reconcile your love/hate recordkeeping relationship with tax time:

Keep track of your personal & business receipts and other records throughout the year to document the deductions you claim on your return. This is essential for any routine or potential surprise audit. Be sure to house your personal & business records close by but in separate filing systems and accounts. Specific records you may need to save:

  • Deductible expenses withheld from your paycheck (e.g. union dues, medical insurance premiums, or 401(k) contributions). Keep pay stubs as proof of payment.
  • Form W-2 and 1099
  • Bank statements
  • Brokerage and mutual fund statements
  • Form K-1 (for partnerships)
  • Sales slips
  • Invoices
  • Credit card receipts
  • Canceled checks or other proof of payment
  • Home purchase and sales agreements, closing statements, and insurance records

Save your tax records for at least three years. Some documents require much longer, such as four and seven years. Records relating to a home purchase or sale, stock transactions, IRA and business or rental property should be kept longer.

Do not discard non-tax related records or records no longer needed for tax purposes until you check to see if you have to keep them longer for other purposes (e.g. insurance company or creditors may require you to keep them longer than the IRS does).

Keep copies of your filed tax returns for at least seven to ten years. In some situations you should hold them indefinitely (e.g. did not file return or fraudulent submission). They will also help you with future returns with computations, and any potential amendments to prior years.

Thorough and up-to-date recordkeeping throughout the year save you time and effort at tax time when organizing and completing your return. If a paid professional does your recordkeeping and tax prep for a CPA, the records you have kept will make it much easier on the preparer and yourself. So, take on this trio with determination and a smile—and a little music on the side! And you will find creative ways to dance through tax time.