If the IRS comes a-callin’, you’ll need to be ready

Posted on 30. Jan, 2013 by in 2012 Taxes, Tax, Uncategorized

Except in the case of actual fraud, the IRS can (and will) go back 6 years in your records. If they have questions on what you reported, those questions will not be asked of until several years after the return is filed. If the IRS does come knocking, they will want invoices or receipts to document the amounts you told them you spent. Given the usual time lapse, however, the organizational system that made sense to you at the time, and the appropriate box of records, may be difficult to find, leaving you in a tough spot.

As the article linked below says, cloud-based storage, which offers plenty of storage space and is inexpensive or free, is a great alternative to paper. Another route is cheap and easy scanning of your receipts and other tax documents. Either way, you’re creating an easy to find, permanent record that can be stored for at least six years.

Whichever method you choose, the trick to making it work is to HAVE A SYSTEM! Match your files of expenses to the expense line item on your return. Have a simple coding system for receipts. In other words organize, organize, organize, and if the IRS tries to pick on you, they will have met their match!

This article presents some tools and ideas you may want to adopt …

– Catherine Joy

How to avoid the tax receipt mess you made in 2012

By Kevin Purdy, Fast Company

If you’re anything like me, the last time you thought about how much you needed to pay in taxes for 2012 was in April of 2012. You had a rough idea of how much you’d earn, a rough idea of how much you’d spend and write off, and the reality of your expenses and pay stubs was stashed in a shoe box until April 2013. “There must be a better way,” you tell yourself, year after year, only to find yourself wondering if squirrels are eating your key and missing receipts and invoices, year after year.

But this post is catching you at an opportune time. You’ve just paid the last of your quarterly estimates for 2012 (or missed them). You have roughly three months to pay your remaining state and federal dues on the year. And we’re only a handful of weeks into 2013, the year that you will finally get around to going paperless and keeping all your expenses tabulated, backed up, and available at any time. There’s even a single-serving site to encourage and help you get going

Here’s the path to less document pain in 2013, for your taxes, and for your life in general.

Read more …

 

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