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Save space and trees: Digitize your tax records

My goal this summer, as it has been for the past few summers, is to get my office in order.

My out of control office June 2014

Yeah, that's my office floor. Stacks of old publications and materials from the tax and blogger conferences I've attended.

It's not by any stretch of the imagination a good system. So I swear that in the next few months I will go through these paper piles, determine what is still relevant, file it and dispose of the rest.

Taking tax record keeping digital: I use the word "file" broadly. I also plan to digitize as much of the material as possible.

While I am a paper person and do like some documents in the old-fashioned format, others are just as useful to me in PDF or jpg formats.

I already get bills and bank statements electronically. Much of my work-related reference material can be converted to e-documents.

The Internal Revenue Service feels the same way. The tax agency has been accepting electronic records as proof when it has questions about filings since 1997.

Just make sure you follow the rules. Becki with the IRS highlights some of the requirements in the video below.

IRS electronic records video tip

In fact, says the IRS, electronic records are a good way to secure important documents, especially those that back up your tax filings.

This includes not only bank and credit card statements you receive directly from those providers, but receipts and supporting material you scan yourself.

As for your actual returns, if you file electronically your tax software will provide you with an e-copy of your Form 1040 and accompanying schedules.

If you're a paper filer holdout, you can scan those returns into your system yourself.

Lots of folks nowadays rely on the cloud for backups, but I'm still a fan of transferring electronic records to an external hard drive, USB drive, CD or DVD.

Filling in tax record gaps: When you start getting your records in order, either in real paper form or electronically, you might discover you're missing some documentation.

The IRS can help you fill in the gaps. You can order transcripts of your filing history.

You have two options.

Complete Form 4506-T or Form 4506T-EZ to order a tax return transcript. This document shows most line items on your return as it was originally filed, plus information on any accompanying forms and schedules. It will cost you $50 for each tax return transcript you need.

Or request a tax account transcript. This shows your return's basic data, including marital status, type of return filed, adjusted gross income, taxable income, payments and adjustments made on your account. An account transcript is free and it arrives in about 10 days.

You can request either a tax return or tax account transcript online from the IRS.

Transcripts useful for disaster claims: Having tax records handy is especially useful if you suffer disaster damages, as I noted last week at my other tax blog.

Bankrate Taxes Blog iconWhen a disaster strikes, you might be eligible for some tax relief. If it's a major disaster, you could refile your prior year's return and claim any losses for that tax year. You'll need you previous tax return to make such an assessment.

So make sure that tax considerations are part of your disaster preparations.

I usually post my additional tax thoughts at Bankrate Taxes Blog on Tuesday and Thursday. Last week, however, several factors combined to limit my posting to just one new post. But I'll be back on the regular twice weekly posting schedule next week.

Regardless of how many blog posts I do for each week, you can always check here at the ol' blog the following weekend for a synopsis and links if you miss the original items.

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