Special to the Town Crier
In my last column, I discussed what income records you should keep for tax purposes. This time, I promised I'd discuss expense records that are most important for you to keep.
Organized records will give you a full picture of your financial identity. Should a problem arise, where your records become the subject of a tax audit, you will be able to handle any dispute with facts to support you.
First of all, make certain you keep your W-2 forms that are provided by your employer. These show income tax withheld and provide much of the data for your income tax preparation. You should have copies of estimated tax returns and any tax document that supports your deductions for real and personal property taxes.
Keep all your retirement plan documents, contribution statements and a copy of your plan. If you are retired and withdrawing income from your plan, you need to keep the record of your actuarial assumptions.
Spousal support payments, divorce decree or agreement and your ex-spouse's social security number are important for your permanent records.
Make certain you keep your medical and dental expenses and especially records for amounts deducted by your employers for medical insurance and expenses for which you were reimbursed, such as car expenses, gas mileage and airline tickets. If you do travel as part of your business, keep a file of credit card slips, all receipts, canceled checks and a detailed diary of your daily expenses.
Keep all documents, including statements and notes and canceled checks that outline any terms on loans you may have.
Keep track of your charitable contributions. If possible, pay by check, if you donate money, so you will have a written record.
One item I haven't mentioned is a record of any documentation regarding personal property value. This sounds like one has to keep every receipt and bill of sale ever received. However, a good way may be to keep record value by video taping or taking pictures of all your home valuables. I sincerely hope you'll never have to produce these records for a casualty or theft loss.
After you sift through all your desk drawers and shoe boxes to find these records, you'll be promising yourself to find a better way to handle your paperwork. I know because I have told myself the same thing.
Simple organization is the only thing that stands between you and well-ordered financial records. Remember, organization takes a minimal amount of effort but it will give you a maximum amount of peace of mind. The time is now.
THOUGHT FOR THE WEEK: "Time is like money; the less we have of it to spare, the further we make it go." - Josh Billings
Rhoades, a former Los Altos resident, is a senior registered representative at Charles Schwab, Inc. in Sunnyvale.