Ever hear the saying, “The time to prepare for church on Sunday is Monday?”

I heard that a lot, probably because I was prone to hitting the snooze button more than once each morning, even as a young child. That propensity for sleeping in often led to me being late in getting around to tasks like choosing my clothes, ironing my clothes, and, well, getting there on time. No matter how many times I cringed at hearing that phrase, I realize now — despite the fact that I continue to hit snooze more often than I should — that this advice can cross over to many important aspects of life.

Tax season, which we’ve all just survived, is certainly no exception to the rule that being prepared is always a great idea. May is the first month after tax season — or the first month of preparation for next year. Right now is the best time for you to start getting ready for the 2011 tax season. In the same vein, here are five tips from the IRS for great pre-tax record keeping.

Five tips for saving tax hassles

There are many records you have that could help document items on your tax return. You’ll need this documentation if the IRS selects your return for examination. Here are five tips the IRS provided:

1) Tax records normally should be kept for three years.

2) Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.

3) In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have impacted your federal tax return.

4) Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment and any other records that would support deductions or credits you claim on your return.

5) For more information on what kinds of records to keep, see https://www.irs.gov/publications/p552/index.html  IRS Publication 552, Recordkeeping for Individuals, which is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

My favorite fortune cookie of all time said, “Over-prepare and then go with the flow.” Good luck with your 2011 taxes.

Starting…now.

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  • you make some good points. it is very important to keep your previous tax information just in case they see something and want to talk to you about it. i have been asked to pay more money a few times and although i was not pumped, at the end of the day you pay it am move on.

    one thing i could do is pay estimated taxes. i know i am always going to owe money and i have excepted that now the challenge is not cringing at the amount due come April every year.

  • you make some good points. it is very important to keep your previous tax information just in case they see something and want to talk to you about it. i have been asked to pay more money a few times and although i was not pumped, at the end of the day you pay it am move on.

    one thing i could do is pay estimated taxes. i know i am always going to owe money and i have excepted that now the challenge is not cringing at the amount due come April every year.

  • Ron

    Recently I had two IRA CDs mature. These were opened 5 years ago when CD rates were high (over 4%). The “automatic rollover” rate was a measly 0.5%. I wanted to close the IRAs and put them into an IRA savings account. It took far too long – almost an hour – to perform this relatively simple transaction, where I was simply moving the FDIC-insured funds WITHIN Wells Fargo Bank and WITHIN an existing Individual Retirement Arrangement.

    It isn’t rocket science and I really don’t know why it took them almost an hour. I had to keep explaining, both to the banker (who was VERY professional and courteous) and to the person handling IRAs via the telephone and other branch personnel, that I was NOT wanting to make a “premature withdrawal” of funds, just to transfer within an existing bank IRA from one account type (IRA CD) to another type (IRA savings).

    Again, my direct face to face interactions with them were very positive. But Wells Fargo really needs to develop up-to-date procedures for making rather routine transactions within Individual Retirement Arrangement plans. Although I like to keep some IRA funds at a bank rather than a stock brokerage, I’m really tempted to move the IRA to the brokerage and simply keep it in short-term CDs given that Wells Fargo has so much trouble moving funds within an existing IRA plan.