It’s not tax time yet. Or is it?

“You need to keep track of financial records every day to be
ready for tax time,” says
Esther Maddux. A financial management specialist with the
University of Georgia
Extension Service, Maddux knows the value of good record
keeping.

“Organized records can mean the difference in financial gain or
loss,” she says. “Your
personal finances are like a minibusiness. They deserve to be
operated efficiently.”

The tax collector isn’t the only reason you need to keep good
records. They can help
you prove losses after fires or theft. They save you time and
money in processing
insurance claims or proving transactions or ownership. They give
you a summary of
your financial situation to help in financial planning, estate
plans, net worth statements,
investments and retirement plans.

“In a divorce, financial records can establish separate and
joint property,” Maddux
says. “They can prove ownership in a lawsuit or a fight over
inheritance of property.
They can also give your family easy access to information to
settle your estate.”

What to keep: You must keep records so you can prepare a
complete and accurate
income tax return. The law doesn’t require any special form of
records. But keep all
receipts, canceled checks or other proof of payment, Maddux
says, and documentation
to support any deductions or credits you claim.

How long? “Keep your records as long as they are
important for the federal law,”
Maddux says. “Keep records that support an item of income or a
deduction. The period
of limitations varies, so check with a tax expert on length of
time.”

Where to keep records: “You can save yourself time and
money if you gather your
important records, track down the ones you’re missing, throw
away those you don’t
need and file what’s left in its proper place,” Maddux
says. “You don’t have to do the
job in a day or a week. Tackle it a chunk at a time.”

Keep certain records that are hard or impossible to replace in a
safe deposit box or a
fireproof box at home. That includes items like your car title,
birth certificate, marriage
certificate and will.

Current financial records can go in a metal file cabinet,
accordion file or cardboard
box. At the end of your record-keeping year, throw away items
you don’t need and
move important papers to a permanent file.

“A good time to clean your files is when you prepare your income
tax return,” Maddux
says. “Keep items such as tax returns and bank statements.”

You’ll want certain records with you at all times. That includes
credit cards, driver’s
license, your insurance card and emergency information.

Want to know more about record keeping? See a tax consultant,
the Internal Revenue
Service or your county Extension Service agent.