It is a good idea to keep all of your receipts and any other records that you may have of your income and expenses.
These will come in very handy if you are audited. It is best to hold on to these records for at least 7 years.
It is advantageous to categorize your expenses:
- Medical Expenses
- Business Expenses
It is recommended that you keep these documents for three to four years. Check the Retention Guide on this site for additional details.
If you are audited, it is very likely that the auditor will ask to see the last few tax returns. It is recommended to keep these tax returns forever.
An added benefit of keeping your tax returns is that you can see what you claimed last year, allowing you to adjust for the current year.
If you purchased goods that you plan to sell later, you should keep the receipts to calculate your gain or loss on it correctly.
- Anything regarding the property you own and any fixes and repairs that you perform.
- Receipts for any jewelry or other valuable collector’s items
- Records for capital assets, stocks, bonds and such
If you are an employee of a company, your system needn’t be complex – you can keep your records separated in folders.
If you are a business owner, you may want to consider hiring a bookkeeper or accountant.
Our Scarsdale tax preparers here at Herman & Company CPA’s are here for all your financial needs. Please contact us if you have questions about these provisions or any other tax compliance/planning issues, and to receive your free personal finance consultation!
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