There are many reasons to keep records. In addition to tax purposes, you may need to keep records for insurance purposes or for getting a loan. Good records will help you:
- Identify sources of income—to separate business from non-business income & taxable from nontaxable income
- Keep track of expenses—to see if you can claim a deduction
- Keep track of the basis of real estate property– you need to keep records that show basis of your property
- Prepare tax returns—good records help you to file quickly and accurately
- Support items reported on tax returns—you must keep records in case the IRS has a question about an item on your return
For a checklist to guide you on the disposition of your financial records, click here to read our whitepaper.