The key to avoiding headaches at tax time is keeping track of your receipts and other records throughout the year. Whether you use an excel spreadsheet, an app, an online system or keep your receipts organized in a folding file organized by month, good record-keeping will help you remember the various transactions you made during the year.
Records help you document the deductions you’ve claimed on your return. You’ll need this documentation should the IRS select your return for audit. Normally, tax records should be kept for three years, but some documents – such as records relating to a home purchase or sale, stock transactions, IRA, and business or rental property – should be kept longer.
In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return including but not limited to:
- Credit card and other receipts
- Mileage logs
- Canceled, imaged, or substitute checks or any other proof of payment
- Any other records to support deductions or credits you claim on your return
Good record-keeping throughout the year saves you time and effort at tax time. For more information on what kinds of records you should keep or assistance on setting up a recordkeeping system that works for you, please call the office.
Be sure to tell the IRA trustee that the contribution is for 2018. Otherwise, the trustee may report the contribution as being for 2019 when they get your funds.
Generally, you can contribute up to $5,500 of your earnings for tax year 2018 (up to $6,500 if you are age 50 or older in 2018). You can fund a traditional IRA, a Roth IRA (if you qualify), or both, but your total contributions cannot be more than these amounts.
Traditional IRA: You may be able to take a tax deduction for the contributions to a traditional IRA, depending on your income and whether you or your spouse, if filing jointly, are covered by an employer’s pension plan.
Roth IRA: You cannot deduct Roth IRA contributions, but the earnings on a Roth IRA may be tax-free if you meet the conditions for a qualified distribution.
Saving for retirement should be part of everyone’s financial plan and it’s important to review your retirement goals every year in order to maximize savings. If you need help figuring out which retirement strategies are best for your situation, give the office a call.