“How can I keep good tax records?” CPA . Answers
Keeping your financial records organized is one of the most important – and sometimes the hardest – parts of personal money management. By taking the time to scan and organize your financial records, you will be able to find exactly what you need when you need it.
Robert Powell of Retirement Daily sat down with Jeffrey Levine, a certified public accountant and tax professional with Buckingham Strategic Wealth Partners on how to organize important documents and update records.
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Organize important documents now
What documents should you keep?
Keep hard-to-obtain documents, such as:
- tax revenue
- Legal Contracts
- Insurance claims
- Identity proof
How long should you keep your records?
A good rule of thumb is to keep financial records and documents only for as long as necessary. Here are some recommendations for how long to keep specific documents.
Records to be kept for one year or less:
- Bank or credit union data
- Credit Card Account Statements
- Water and electricity bills
- Auto and home insurance policies
Records to be kept for more than a year:
- Tax returns and supporting documents (keep them for at least 3 years after filing)
- Mortgage contracts (hold them until the mortgage is satisfied and you have proof of satisfaction)
- Property assessments (keep them for as long as you own this property)
- Annual retirement and investment statements (keep annual statements but ignore monthly or quarterly reports)
- Receipts for major purchases and home improvements (keep them for at least 3 years after the property is sold)
Records to keep indefinitely:
- Birth, death and marriage certificates
- adoption records
- Nationality and military discharge papers
- social security card
quotes | How to get a jump on tax season 2023
Jeffrey Levine, Chief Planning Officer, Strategic Wealth at Buckingham
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Robert Powell: Want to get a jump on your 2023 tax return? Well, here to talk to me about this is Jeffrey Levine of Buckingham Wealth Partners. Jeffrey, what words of wisdom do you have for us?
Jeffrey Levine: Well, next year’s registration starts to get organized now. We’re in the middle of 2022 and you won’t necessarily file your taxes for about another year in some cases. Or in fact, some of you may not file your taxes for much longer than that. With that in mind, it is important to keep good records. Today, it’s better to do it digitally because it’s backed up. You don’t have to worry about fires, floods, or things getting lost. But at the very least, having a place to store everything related to your taxes is the most important thing.
And as a CPA, I can tell you it’s always easier for me to go through someone’s files and get rid of things that aren’t relevant than it is for me to say, hey, I think something should be here that isn’t. Well, it is better to have a lot of things easier than to lose things. Over the years, I would say unequivocally, those who are more organized and better prepared will have an easier time in the future and will pay less taxes.
Editor’s note: Zach Foulds of TheStreet produced this video and contributed to this article.