![]() ![]() To be on the safe side, McBride says to keep all tax records for at least seven years. Keep for seven years. If you fail to report all of your gross income on your tax returns, the government has six years to collect the tax or start legal proceedings. If you have investments in stocks, bonds, and mutual funds, for example, keep the purchase confirmations until you sell so that you can establish your cost basis and holding period, McBride says. If you own a car, hold on to the title until you sell it. Keep for a year or longer. Hold on to loan documents until the loan is paid off. Keep insurance policies and investment statements until new ones arrive. Once you’ve done that, shred the paper documents or securely trash electronic files unless you need them to support your tax return. Keep for less than a year. In this file, Weltman says to store your ATM, bank-deposit, and credit card receipts until you reconcile them with your monthly statements. Weltman says a good way to start is to divide your financial papers into four categories. It will also make life easier when you have to do taxes again next year. “If you haven’t yet started on your taxes, getting your paperwork in order will reduce stress and make you more efficient,” McBride says.Įven if you’ve already filed your taxes, creating an organizational system now could benefit you if you’re audited. Greg McBride, chief financial analyst at Bankrate, suggests that you put all your W-2 forms together in one place, and do the same for your 1099 forms and brokerage account statements. You should also be sure that your tax documents are well-organized. Many Americans, for example, should keep an eye out for a new IRS form, Letter 6419, which details how much you received in expanded Child Tax Credit payments in 2021. So it’s crucial that you keep track of tax forms and other documents that come in. “Given the difficulties of dealing with the IRS, this is not a good time to throw away any tax-related paperwork,” says Dan Herron, a CPA and financial planner in San Luis Obispo, Calif. ![]() Many Americans find the tax season stressful, but this year’s filing process could be worse than ever.Īs a result of the pandemic, the IRS faces a huge processing backlog, according to a January 2022 National Taxpayer Advocate report, while a shortage of staff means that many taxpayer queries remain unanswered. A more recent report found that the backlog had ballooned to nearly 24 million returns for the 2021 tax year. ![]()
0 Comments
Leave a Reply. |