Proactive Protection Can Save You More Than You Think!
Author: Jenny Shilling
Everyone knows you have to store your tax records in a safe place. But how do you keep them? You store them in a box in a back room somewhere, right? What happens if disaster strikes? Fire or flood wipes out your house or storage facility and all of your tax records get wiped out in one fell swoop. And, just to make matters worse, the IRS comes knocking and wants to audit your records...
Luckily, this situation doesn't happen often. For the few that it does happen to, there are ways to repair the situation. When your records are destroyed or missing, the IRS regulations allow you to "substantiate a deduction by reasonable reconstruction of your expenditures or use." What this means is that you have a chance to reconstruct your records which is a very time consuming and expensive task. There are very simple and less expensive ways to avoid this:
- Invest in fire and water-proof filing cabinets to store your tax records.
- Purchase a scanner or scanning app for your smartphone and store your records in the cloud or offsite. You can keep backup copies of your information this way.
While you probably won't get all of your original deductions with a reconstruction of your tax records it's your only option.
At the Tax Office, Inc., we are a paperless office and scan all paperwork as it comes in and reccomend that you do the same. If there are any questions we can answer regarding record keeping, storage or taxes, please contact us. Our tax specialists are happy to assist with any tax related matters.
