Keep Your Tax Records

Keeping Tax Records the Right Way

Men are governed by laws not by men. Moreover, almost every aspect of your life is invaded by the laws of the land. From the disposition your properties, to the expected norms in the society and eventually to the manner of paying tax contributions, no one is considered above the law. For that reason, there are things that you need to comply and consider in order to adhere to what the law expects of you. Tax laws may seem complicated depending on the state you are in. A Tampa tax attorney will have different legal advice compared to a tax attorney in Ohio, because of the fact Florida has no state income tax. The tax system of different states is diverse. Tax law, which is a codified system of laws that covers government levies on certain business or economic transaction, imposes taxes. These taxes are delivered back to taxpayers by way of government projects. If you fail to do your duty as a taxpayer, the financial penalties can be harsh. All of the arguments against income tax have been shot down by the courts, and the penalties are even more harsh is a person is found to have brought a frivolous lawsuit.

Tax law is a sub-discipline in law schools. They are consultative in nature however; they can be used in litigation purposes. Tax law is crucial in business as well as personal planning matters. If you are facing an Internal Revenue Services (IRS) trouble, you need a tax attorney to assist and defend you.

Tax laws demand that you keep tax records for the government to check. These records can also serve as proof of your compliance with the tax laws. Nevertheless, many taxpayers have no idea about what records to keep and how long to keep them.

By tax records, it means tax returns and several documents that support your returns like bank statements, receipts, 1099s, and more. These documents are important to fend off the IRS. Your tax attorney will tell you what these records are and how important they are.

However, to make it easy for you, here is a quick review:

Tax returns contain the tax contribution that a taxpayer has to pay. They serve as a good proof that you have paid your taxes moreover; they have to be kept indefinitely. The IRS is known for misplacing and losing tax returns so be sure that yours come in handy to circumvent a audit. The IRS is receiving millions of tax returns every three months moreover; lost returns can be said to be part of the inevitable. Hence, it is better to keep every single tax return that comes into your possession.

If you are filing your tax returns electronically, be sure to get a copy of your return, the preparer or firm are required by law to give you copies. Supporting documents, on the other hand, should be kept for a period of 6 years from the filing of the returns. However, this period can be extended in special cases. If you are filing from software on your computer, make sure to print at least one copy.

Tax records are vital in case of divorce proceedings. Also, I tell my clients to save the necessary documents like financial documents, tax returns, supporting documents, and credit reports, not just for divorce purposes but for other circumstances as well. If you do not keep these records, anticipate encountering a nightmarish chapter in your life. It is better to keep your tax files in one place, a filing cabinet will be fine for this purpose.

If you are lucky enough, you will never need your tax records. However, if you belong to the unlucky few who are audited, tax records will be your saving grace to prove your compliance to tax laws.

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Tim Watson is a tax preparer during the season who also runs an SEO directory and an iPod directory. You may use this article as is provided the resource box stays intact.