The tax deadline has come and gone – time to breathe a sigh of relief. But before you throw all of your tax documents up in the air to celebrate the occasion, we need to discuss just how long you should keep that info in a safe and secure place.That’s right, you should store your tax information and documentation, including a copy of your tax return, for safe keeping – just in case you need to reference back to it. But for how long?Three-Year LimitationWhen we talk about tax documents, we’re talking about a copy of the return that you filed, along with receipts, or any paperwork that will support your tax deductions or credits that you may have claimed. This includes anything that you used to prove the state of your finances on your tax return.As a generic rule across the board, you should keep your tax records for at least 3 years after the date in which you filed. For example, if you filed this year on April 15, 2015, you should keep your 2014 tax return documentation until April 15, 2018. Simple math.This time frame was put in place to benefit both you and the URA. You can benefit from this 3-year timetable because you have a set amount of time to claim any tax refund that is owed to you.Disposal ProceduresSome people decide to keep all of their financial records – forever. With technology being so convenient, it’s easy to back up all of your financial records on your computer. Be sure you’re using strong security software. It’s a good idea to backup your financial data on a device that’s not connected to the internet 100% of the time.If you choose to throw away your records, shredding is always good advice. You can take it a step further and separate your shredding materials into different waste baskets, or you could take them out back and burn them in the fire.However you decide to save or dispose of your financial records, remember to be safe and secure. This is your financial life we’re talking about here.
- Organizational Assessments - The First Step to ActionDefinition of "Tax Planning"Logical analysis of a financial situation or plan from a tax perspective, to align financial goals with tax efficiency planning. The purpose of tax planning is to discover how to accomplish all of the other elements of a financial plan in the most tax-efficient manner possible. Tax planning thus allows the other elements of a financial plan to interact more effectively by minimizing tax liability.INVESTOPEDIA Explains "Tax Planning"Tax planning encompasses many different aspects, including the timing of both income and purchases and other expenditures, selection of investments and types of retirement plans, as well as filing status and common deductions. However, while tax planning is an important element in any financial plan, it is important to not let the "tax" tail wag the financial "dog." This can ultimately be counterproductive, as virtually all courses of financial action will have some tax consequences, and they should not be avoided solely on this basis.
- Tax Planning Basics
The goal of tax planning is to arrange your financial affairs so as to minimize your taxes. There are three basic ways to reduce your taxes, and each basic method might have several variations. You can reduce your income, increase your deductions, and take advantage of tax credits.1. Take advantage of all possible deductionsTaxpayers overlook many deductions. People who don’t itemize their deductions often wrongly assume they don’t qualify for any. Actually, there are some deductions available even to people who take the standard deduction. Generally, these are referred to as adjustments to income.On the other hand, don’t take for granted that a deduction from last year is still available. Check the 2015 rules now to make sure the deduction you’re counting on is still available.2. Think deductions throughout the yearHold on to cash receipts that document your transactions, supermarket purchases, charitable work, job-search and other tax-deductible activities. Hold on to any paperwork and documents that arrive in the mail, or receipts needed to prepare the return, even if you're not sure. It's always better to have too much information than not enough.3. Keep your filing historyThe value of a tax return doesn't end on the returns filling date or deadline. You'll need to provide this document to get a loan, mortgage etc., apply for loans and to check the status of your refund on the Internal Revenue Service's "Where's My Refund?". Guard your return copies and support documents just in case. The URA and other relevant legal bodies can audit you as many years back as they would like if it suspects fraud, so keeping tax returns and supporting documents for at least three to 4 years puts you on the safe side.