Paperwork is normal part of life, school, work and taxes. Owning a home is no different. It’s important that you keep records of anything relating to your home.
- If you need to file a disaster, casualty, or theft loss, you’ll need paperwork.
- If you install energy-efficient appliances, you’ll need the receipts.
- Deducting mortgage interest? You’ll need a Form 1098 or other statement showing how much interest you paid.
All of these plus many other tax breaks and advantages require a paper trail, and having a way of keeping records is the first important step.
What Should You Keep?
Bank statements show both when and how much was withdrawn for mortgage payments.
Credit and debit card receipts can be your records for any renovations or upgrades you did to the home. Receipts are also a record for deducting the residential energy credit. If you installed medically required equipment or upgrades, the receipts are supporting documents when deducting the expenses. The receipts are also helpful in valuing property if you file a disaster, casualty, or theft loss.
Paperwork for selling a home: Any documents you receive or create while selling your home should be kept. This includes any appraisals, legal paperwork, mortgage documents, and receipts for improvement or repairs.
How Long Should You Keep Records?
The IRS recommends that you keep any records or documents used for deductions or credits at least seven years after filing the return. Keeping the records helps in case of a questionable return or even an audit.
How Should You Store Your Records?
This is the age of the Internet, there are lots of options here, such as Google Drive or Dropbox. As your paper documents and important papers come to you, just scan and upload to your storage. And if you receive bank and credit card statements by email, take the time to save those records to your storage.
No scanner? Do you have a digital camera, cellphone, or other device with a camera? The IRS will accept digital photographs as valid records. Just snap and upload.
If you have paper documents, at a minimum you should store them in a home fireproof safe. Keep it in a place where you can easily grab it if you need to evacuate your home quickly. Storage outside the home is a good idea, such as in a bank safe deposit box.
For more information about taxes or filing your 2015 return contact one of our offices: Plymouth 734.454.4100, Allen Park 313.388.7180, Grayling 989.348.4055, Royal Oak 248.399.7331, Saginaw 989.782.1985, St. Clair Shores 313.371.6600