Which Tax Records Should You Keep?

The IRS is busy with many unprocessed documents these days, and it wants the taxpayers to make electronic filing of their returns. This electronic process doesn’t end the probable audits, and you can also file an amendment regarding your return. Our tax professionals show you which tax records should be kept in this guide. If you require any tax help, you can communicate with our tax office.

a woman wondering about keeping tax records in & Near Bronx, NY

The IRS usually has three years to process your return. You can make amendments to your return until three years after your filing. For instance, you have to keep all the records like income from freelancing, investments, and more from the tax season of 2022 until 2026. If you need any assistance regarding the issue, Bronx Tax Services is available.

Which records do landlords have to keep?

The homeowners have to keep every record. The real estate market has experienced exciting times in recent years. The prices appreciated by around 17 % during 2021, which was an extraordinary phenomenon. The price increase tempted many homeowners to sell their properties. This price surge is still continuous, and sellers may feel regret about their decisions.

In recent years, the taxpayers who have sold their places can save $250000 of their profits without paying any taxes. The number increases to $500000 for spouses who have filed together. For the profits that are more than the mentioned numbers, a tax percentage of 0%, 15%, or 20% is available depending on the income status. If you have experienced significant upgrades to your place, you might not pay any taxes or at least reduce it significantly. If you need any help regarding the issue, don`t hesitate to talk to our tax professionals.

You must have documents for the upgrades that you have made. You can prove the upgrades just by utilizing the required documents. Imagine that you purchased a house for $100000 around five years ago, and you`ve cost around $20000 for renovations in the bathroom and kitchen during this time. Now, the cost basis of your house is $120000 as long as you have the necessary documents. Then, as a homeowner, you have to keep everything.

You don`t have to keep any upgrade records for inherited houses, and officials calculate the value according to the fair price of that time. But if you want to make that house your primary place, you have to keep the improvements records from the date of moving in.

Tax on investments

If you are a participant in the stock or crypto market, you might have made considerable profits in recent years. The US government printed a lot of money during the pandemic, and it caused enormous gains in stocks and cryptocurrencies. You have to keep all your transactions regarding these kinds of investments. It is not something related to your brokers, and you are the only person that must respond.

You have to keep the statements for four years when you sell stocks. If the traded stocks are worthless, it`s better to keep the records for seven years. All the traders have to report the purchase and sale price of the equities. Your tax will be determined according to these reports. The brokers can help regarding the issue, and some have helpful financial archives. For instance, Fidelity keeps the records for around ten years which is a fantastic procedure.

Try to know the recordkeeping policies of your broker, and if you have any questions, don`t hesitate to ask them. If you want to change your broker, you have to download all the records and statements because the broker will eliminate them after leaving. It is an important point that you must consider before closing an account.

Cryptocurrencies and NFTs are new forms of investments. Some exchanges keep your records, and some don’t. You have to keep track of all your transactions. You have to keep the sales statements for around four years.

If you hold investments like stocks and cryptocurrencies for more than one year, your tax percentage would be 0%, 15%, or 20%. This percentage depends on your income. If you don`t hold these investments for more than one year, your tax calculations will be an ordinary rate.

In another blog post, We discuss IRS & Taxation of Virtual Currency.

Tax rates on retirement accounts

If you have a retirement account, the provider will inform you about the details each year. The account provider will send you some statements concerning all the collaborations that have been done in that year. Keep these kinds of documents for at least four years. The issue is crucial for some special accounts, and you have to prove that you`ve already paid the tax for these.

In the case of having shares in a nondeductible IRA, it`s better to keep the records for longer than four years. We have to say these kinds of documents should be preserved forever in a conservative prospect. If you have to change your provider, it is necessary to keep all the records from the first provider. These records contain all the details of the transactions. Don`t ignore the statements and documents of this change because it can impose a massive tax on you.

lots of tax records for keeping in & Near Bronx, NY

Try to digitize all the files

Try to digitize all the tax documents because you can keep digitized files easier than paper ones. There are various solutions for keeping digital files safe and sound. Some new technologies like blockchain can help a lot regarding this issue.

If your broker offers paper and digital options for records, choose the digital one, and ask the broker about the time you can download the files. Try to implement the same policy for other accounts as well. If your company doesn’t offer digitized files, use your scanner or cell phone, and make digital files. This method can increase security to a high degree.

If you are a freelancer or a self-employed person, try to keep all the necessary receipts. Holding those receipts for long years may lose their quality, and their ink will fade away. Don`t forget to make these documents digital as soon as possible.

Try to keep the paper form of the old documents because digitized files are not sufficient for some tax professionals, and they want to see the original papers. You can store your digitized files in various ways, including Google Drive or using innovative technologies like blockchain. Try to make a secure password for your documents, and don`t forget to back them up on something like a flash. Any carelessness regarding the issue can impose massive taxes on you.

Do you need SCL Tax Services In & Near Bronx, NY?

You have to know which documents to keep for tax purposes. SCL Tax Services In & Near Bronx, NY, can help significantly in this field. We have great tax professionals that guide you to the best solution. Correct recording of files is an important issue that affects your future tax payments. You have to hold some recordings and shred others. Any mistakes here can be costly. Then, it would be best if you had experts and consulting services. Our experts know all the details of the procedures, and they can provide a step-by-step guide for you. Don`t forget to contact us regarding the best solutions for your tax payments. Call us at 347-305-4348!

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