End of the Year Record Keeping

Ahhh, the end of another year…

It's a wonderful time for reflection, a chance to see how far you've come over the last twelve months, and a time to plan for the future. You might decide to page through the 2015 photo albums, but here's another option: reminisce while you're going through last year's tax records!

Prior tax returns. This is a great time to lessen the amount of paperwork you’ve been saving. Most sources say you should save your tax returns forever, but that supporting documents (sales copies, receipts, etc.) can be shredded after three years. A good rule of thumb is to keep any documents that have to deal with property for as long as you own the property. This includes depreciation schedules, contracts, and so on.

Remember to safeguard your tax returns, as they do contain information such as your family's names and social security numbers.

Proper documentation. It's important to make sure you have corroborating evidence to back up any income and deductions on your returns. Mileage logs, company reimbursement policies, receipts for job-related moves or education—all of these are important to have on hand for business deductions. Be sure you have receipts for any out-of-pocket medical expenses, including your health insurance policy payments if it's not through your employer.

Sure, it's not exactly a Norman Rockwell post-holiday moment, but getting a head start on your taxes can get it over with so you have time to do other, more enjoyable things.