The first step of good tax planning is good recordkeeping
Recordkeeping of your financial transactions is a key to understanding and enabling year-round tax planning. Organization makes it easier to prepare taxes and respond to any questions from taxing authorities.
Records help organize:
- Sources of income
- Tax returns
- Documentation supporting the tax return
Generally, the IRS recommends taxpayers keep records for three years from the date they file the tax return.
Records to keep:
- Tax-related records
- IRS letters, notices and prior year tax returns
- Property records
- Business income and expenses
- Health insurance
Further detail - IRS Tip