As an accountant in Celebration, FL I ask my clients, Do you keep a record of every tax document that you have? This is a really nice practice, but the truth is, IRS does not always ask for everything if they ever decide to visit you for an audit. So which tax file should you keep and which you can let go? Ask your accountant Celebration FL for the details, but for right now, here are some tips that can help you with this.
Know the limits
When you are preparing for your taxes, you should gather all those documents that provide evidence for your income sources, keep a track of your expenses, provide you with details on the value of your property, help you in preparing returns or providing you with proof of the claims you make on your tax forms. There is just one problem to this: storage is limited whether you save softcopies or keep hardcopies. Does this make you think about the cloud? With this, you may have unlimited storage, but only so when you pay an increased price.
As a rule of thumb, you should keep the above documents with you only until the chance that you may face an audit becomes zero. Generally, this is around three years, but it is extended to six years, if the IRS suspects you have not give a true picture of your income. As such, your chosen accountant Celebration FL will advise you to hold onto your tax documents for at least six years. Once this period is over, you no longer need them and can dispose them off.
What about1099, W-2s and other forms?
When you file your taxes, you need many forms such as your 1099 income statements, cancelled checks, W-2 forms or anything other document that serves as a proof of your deduction. You should keep all of these if you used them to make claims on your return, but if you did not, you can just get rid of them. As an example, you do need your medical bills, but if they do not meet the deduction limits, you can throw them away, even if they are just a year old.
However, there are items that can incur taxes later on when you sell them. These include documents related to your pension, investment in the stock market and so on. Your accountant Celebration FL will advise you to keep these until you have sold off the asset.
Hold onto your home related documents
Your home related expenses lead to taxes and even help you in bringing them down. For instance, if your profits from a home sale cross a certain limit, you will have to pay taxes on the. On the other hand, you can utilize the interest on your mortgage as a deduction. As long as the home is under your name, keep these documents with you.
While you should take note of all of the above, keep one thing in mind; tax laws change frequently and depending on the currently enforced policies, your accountant Celebration FL may have a slightly different advice to offer.
If you need more information about our Celebration, FL accounting and tax services, please contact us at 407-344-1012. Freedomtax Accounting’s staff has been providing honest accounting services and tax services for 15 years. Our Orlando accounting and tax firm has its main offices in Kissimmee, FL. Our services are provided nationwide, but mainly in the Central Florida market to areas like Orlando, South Orlando, Kissimmee, St. Cloud, Poinciana, Clermont, Davenport, and Hunters Creek, FL. Our tax accountants and IRS enrolled agents (irs ea) specialize in corporate accounting and bookkeeping, tax services, tax preparation, back taxes help, tax debt relief, tax resolution, tax planning, itin numbers, incorporations, and non profit 501c3 tax exempt status applications.