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Audit Proof your records


Audit Proof your records is not as hard as you may think. First you need a couple of things. Most are FREE, in fact you may already have some of these.

Use a professional tax person. The IRS knows we (tax people) do not want our clients audited and if I do something wrong on your returns the rest of my clients will also be audited. It is not worth the chance. We also know how to word your deductions so that they do not send a RED flag to the IRS.

Second you need good records. I recommend file folders, envelopes or even storage bags. Label each with the the type of deduction you are going to put in each. Then each day when you get home from work place your receipts in the correct folder or bag. You should have a bag for pay stubs, medical bills if you are able to take them, cash donations, non-cash donations, daycare, retirement statements, etc.

Then at the end of the month or year add up the receipts in each and write it on the front or on a piece of paper you leave inside the envelope or bag.

For your daycare information you should also have the name of the company or person, address, phone number and EIN number for each. For non-cash donations you need the date you gave the items and a listing of the items you gave. Do not make this more work then it needs to be, here is a form you can use to place tally marks next to the items you are donating.

If you have a business I recommend you get a three ring binder and place your Articles or Organization, your EIN form, meeting notes, officer listing, rental agreements, employee contracts, employee benefits info, and monthly P & L reports just to name a few.

If you deduct meals then you will need the names of the persons you eat with and what business was conducted.

Tools, most of us have cell phones that can take pictures. As you know receipts fade. Take a picture of the receipt and save it to one of the free storage systems like Drop Box or email it to yourself and save it in folders on your email. Make sure you make the notes listed above.

Another tool I like is Talk Accounting you have to see it to believe it. TalkAccounting.com

MileIQ is great for keeping track of your miles. It is a cell phone app.

Mint.com and WaveAccounting.com are both free bookkeeping software that will pull your information from your bank so you do not have to enter it yourself. Or you could use excel if you like.

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