Saving receipts for charitable donations is a must for the taxpayer claiming deductible items. Taxpayers may choose to complete 1040 EZ forms, online tax returns, or other do-it-yourself programs. Taxpayers may also opt to have a company perform the tax return such as a local Certified Public Accountant or walk-ins at various consumer locations. As the year ends, here are four tips to help taxpayers organize for completing tax returns.
Save your receipts. Each purchase made or donation made must be recorded by receipts. A good trick is to write the purpose at the top of the receipt such as “church donation”, “food bank”, or “school fundraiser”. Specific donation centers such as Make-a-Wish Foundation or Goodwill give their own receipts on letterhead and should also be saved.
Organize your expenses. Keep labeled files for various expenses such as “household”, “banking”, “utilities”, or “credit cards”. As statements are sent, file the statements each month in the appropriate file. This may be done electronically if taxpayers utilize e-statements. Either way, filing each month helps the taxpayer have easy access to the statement or related paperwork if the item is needed for the tax return.
Make copies. Taxpayers should have the originals when showing tax forms such as W-2s and interest reports, but have a few options when it comes to copies. Scanners can scan and record receipts, notices, and other forms needed for a tax return. Keep copies of checks, statements, receipts, and other related evidence of a payment or purchase for at least three years. Tax audits could be as far out as seven years. Making scans and electronic copies may help keep the paper under control and still have access to payment proof.
Make an early deadline. April 15 can get here quick so create an early deadline. There is no penalty for filing early and taxpayers may mail in a federal tax return, complete it online, or have a third party complete the return by March 31. This gives the taxpayer roughly two weeks to complete the paperwork or fix any problems. If there is a question about deductions or accountability, have a third party complete the return such as a local CPA or walk-in company. There is a fee for this service but it may be worth peace of mind for the tax payer.
It is the responsibility of each tax payer to complete a year end tax return with the Internal Revenue Service. For more information on the IRS and tax returns, click here.