Prepare for a Disaster – Plan to Keep Your Tax Records Safe

June 1st is the start of the Hurricane season and recent rains have demonstrated the very real potential of flooding. The IRS urges taxpayers plan to keep tax records safe and this firm agrees. The savings in time, aggravation, and money make protecting tax records sensible. The following are suggestions to help make that plan.

  • ·         Use Electronic Records. Banks, brokerage houses, and other financial service providers provide and maintain financial records in electronic format available online for download. With home scanners you can make your own scans of records. Either way you can keep an additional set of records electronically. Download the files to an external hard drive, USB flash drive, o burn them onto a CD or DVD. Prepare a second copy to place some place other than your home; a safe deposit box, self-storage unit, or trusted family, friend, or your attorney in the event your home is affected. You may not be able to retrieve the copy held at your home in a disaster covering a large area so consider places outside your home area.
  • ·          Original Paper Copies. Keep the original paper records and consider keeping a second set in a waterproof container away from the originals. Fireboxes are designed and built to protect the contents from fire, not water. Water will enter a firebox and wreck documents, usually within seconds of submersion.
  • ·         CPAs. CPAs maintain records for clients indefinitely, often outside the immediate area of their office. Firms have moved or are moving rapidly to paperless offices choosing to store documents electronically. Electronic records are easier to access and retrieval and with the falling costs of electronic storage more years are maintained.
  • ·         What records to keep? Keep copies of; mortgage contracts, sales documents on properties, vehicles (including boats), insurance contracts, tax returns for current and prior years and the documents used in their preparation, birth certificates, identifications such as driver licenses and social security, business and personal credit card accounts numbers, equipment ID numbers and statements, bank statements and canceled checks, photographs, videos, lists of valuables, descriptions of them, and photographs of the valuables including business equipment. Keep lists of the documents backed up to help in gathering documents and keeping them updated. Label and date the containers, hard drives, USB flash drives to make it easier to find what you are looking for. After a disaster you will want quick access to many of these documents.

Hopefully you will have no need to access the stored documents. If you do need to you will glad you prepared.

PrintView Printer Friendly Version

EmailEmail Article to Friend

« The Important of Conducting a Business Like a Business | Main | Under Reporting the Mortgage Interest Deduction? »