How to Keep Adequate Tax Records

Video Transcript

"This is financial advisor, Patrick Munro, talking about how to keep adequate tax records. If an individual starts their year off what they should do is buy a folder, and for all potential write-offs that they have in the course of a year they should develop envelopes for each one. For instance, in the area of automobile expenses, gasoline expenses; if you incur a gasoline charge and the receipt thereof should go into the appropriate envelope, and that envelope, of course, in its appropriate month section so that at the end of the year you have basic envelopes for each and every month of the taxation year. Then, you would add up each of those envelopes for the category that you're looking at, and be able to have a consolidated statement with the receipts to back up the resources that you do have. This can be kept over multiple years, because it's it's normally recommended to keep at least seven contiguous years of tax records for the IRS in case of an auditing situation. Being organized is is very good, and we highly recommend that. This is Patrick Munro, financial advisor, talking about how to keep tax records."