Couples who run businesses together face unique challenges when it is time to split assets during a divorce.
This One Simple Tip Can Save You Hours On Tax Filing
Filing taxes can be a headache. You must sort through several documents, records, and more to prepare your tax return. Waiting until tax time commonly leads to missed deductions and credits that would have meant more money in your pocket. There is one simple trick that many people do not realize will save them time and money on taxes: recordkeeping.
Record keeping throughout the year ensures you don’t miss deductions and can file your taxes quickly.
Keeping records makes taxes much faster and easier to handle. You can keep records as physical or electronic copies. With records, you can be sure to take advantage of every deduction or tax credit that you are eligible for. You’ll be able to clearly back up every claim on your return and obtain all of the full tax benefits all while filing faster.
Which Records Should You Keep?
Here are examples of the records you should keep:
- Proof as payment (W-2 and 1099 forms)
- Bank statements
- Sales slips
- Written documentation for what you paid for (charitable contributions, mortgage interest, real estate taxes)
- Stocks, bonds, and mutual funds dividends
- Pay stubs for deductible expenses
- Insurance records
- Credit card receipts
Records are only valuable if they are well-organized and easy to access. To ensure you can make the most of your records, you should organize them clearly. Here are some tips for organizing records:
- Use folders (physical or digital) for different categories
- Immediately place new documents in their correct place
- Create new folders for each year. For example, create a 2021 folder and then separate subfolders within the 2021 folder for each category.
- scan / photograph documents for digital storage
- Add notes to your receipts, especially for job-related expenses. The receipt must include the amount, location, date, and type of expense. Note these details on the expense if they are not printed on there.
How Long Should You Keep Records?
There are some situations where you may need to keep them for longer, but generally, you should keep your federal tax records for at least three years after filing. To keep your space or computer less cluttered, you could always move the folders for previous years onto an external hard drive or cloud storage system after you file.
Keeping records is the easiest way to save time and money when filing taxes. Everyone should keep a record, but it’s especially important for those who itemize deductions and/or write off job-related expenses.
Having a professional, well-trusted financial advisor at your disposal will help make every aspect of your succession planning smoother.