This might be the simplest tax tip I ever offer:
Download and securely store copies of all your bank statements for all your accounts.
Very few individuals and businesses actually do this but in the event of a tax audit, it will save a lot of time and worry. A few other tips along the same line:
- Don’t assume that the auditor will be willing to work with paper documents.
- Don’t assume that you will be able to find paper documents when you need them.
- Don’t assume that you can afford the cost of handling paper documents in a tax audit.
- Make sure that your accountant has a separate copy of the statements in a secure storage location.
- Don’t assume that you will be able to get copies from the bank, especially if the bank is involved in a merger or if you switch banks.