Good bookkeeping is a crucial element of tax planning
Another tax day? I know, I’m just as tired as you are whenever I heard of “tax”. But worried not! This is just a reminder for better bookkeeping to preparing for tax return 2021. It’s still early, but reviewing your bookkeeping now will pay off when tax day comes.
Here are some suggestions to help taxpayers keep good books.
Taxpayers should have a system that keeps all their important information together. Software programs are perfect to keep all electronic bookkeeping. If your information is not digital, print it out and keep it in labeled folders.
Keep tax records to the files as soon as you receive them. This includes Notice 1444, Your Economic Impact Payment, and unemployment compensation documentation. It’ll make tax preparation next year easier when you have records ready.
Review your tax return to ensure that you don’t miss any credits or deductions. Double-check, even triple check credits, and deductions. Taxpayers should also keep records, including receipts, canceled checks and other reports that support income, such as unemployment compensation.
You should keep records relating to the property you bought or sold. These records are important to figure out your basis for figuring losses or gains.
Every tax return records for the last 3 years must be kept carefully. Taxpayers who have employees must keep all employment tax records for at least 4 years after the tax is due or paid, whichever is later.