Tax planning now will help you in future
Whether or not you prepare your own personal income taxes, efficient record-keeping throughout the year will make the task easier when tax time rolls around.
Requirements for substantiating claims on income tax returns vary, but taxpayers should keep accurate records of all financial transactions, just to be safe. Even if you customarily take the standard deduction, unforeseen circumstances may make it more beneficial for you to itemize your deductions.
Among the records which should be saved are:
- Medical and dental expenses, including the amounts you paid for medical care insurance and amounts repaid to you by medical insurance;
- Tax records, including state and local income tax, and real estate tax (not all taxes are deductible, but you should be prepared to take advantage of those which are);
- Interest on mortgages as well as fees and expenses related to the sale or purchase of a home;
- Financial contributions to organizations operated for religious, charitable, educational, scientific or literary purposes (gift-giving is a complicated tax area so if you give a gift of property, keep particularly-detailed information);
- Casualty or theft losses associated with property may be deductible (it is important to keep insurance-related records in anticipation of these kinds of deductions);
- Miscellaneous records such as alimony payments, union dues, business use of home, expenses for education, and fees to employment agencies.
The types of items which are deductible are included with the instructions for filling out your tax return. A tax attorney can also provide helpful information.
Keeping proper tax records will not only prevent you from paying more taxes than necessary but will help you avoid filing an erroneous tax return.
Note: This information was prepared as a public service by the Illinois State Bar Association and is a joint project with the Illinois Press Association. Its purpose is to inform citizens of their legal rights and obligations.
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If you have questions about the application of the law in a particular case, consult your lawyer. The law is constantly changing. Information on this site or any site to which we link does not constitute legal advice.