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Q I'm still recovering from doing my taxes this year. I spent a lot of time getting copies of records I should have kept myself but had tossed out. Can you give me a checklist of what I should keep so I'm better prepared for 2005?


A What you keep is important, but so is how you keep it, according to enrolled agent Joseph Smith, EA, RRT. The most important item that you can keep is a travel log, he says, but a filing system is essential too.


Here's a system he recommends: Get a portable file storage box you can carry with you and lots of manila folders. Create folders for each of the key areas everyone needs to keep records of, including:


* income records (W-2, 1099, and 1099G forms)


* capital gains or losses records (receipts or confirmations of any stock or bond transactions)


* education tuition or interest payments


* medical deductions


* taxes you paid on vehicles, boats, or any other personal property that was based on their value


* real estate taxes paid on property (house, mobile home, and so on)


* state taxes paid during the year for previous tax years and estimated payments made during the year


* interest paid on mortgages, home equity loans, or other deductible interest


* charitable contributions


* casualty losses if not covered by insurance.



Also make up folders for your business expenses, including:


[light shade square] professional expenses. These include uniforms, licenses, dues, seminar expenses, and other job-related costs, such as printing fees for resumes, postage, and money-transfer fees.


[light shade square] phone and Internet connection bills. If you have multiple phone and Internet accounts, itemizing phone expenses can get tricky. One approach is allocating a set percent of your routine expenses as business calls, but be conservative; the percentage you use must stand up to scrutiny if your records are audited or examined. Keep your receipts in a folder as proof.

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[light shade square] home maintenance costs. These include the costs of keeping your home up while you're away, such as lawn care, or fees for forwarding your mail. Keep these records not just to deduct the expenses but also as proof that you have a permanent residence.


[light shade square] miscellaneous expenses, such as tax-preparation and investment fees or safe-deposit box rental.



Finally (and most important because it will include most of your expenses), make up folders for each assignment to keep receipts related to it, including logs or receipts of:


* travel to the assignment. If you stop at home between assignments, split the records-expenses incurred while traveling home from your previous assignment belong in this folder; expenses incurred while traveling from home to your next assignment belong in that folder. Keep all receipts and logs covering mileage, lodging, tolls, parking, and air or travel fares. Although most travelers routinely keep mileage records, those who are depreciating a vehicle also should keep receipts for gas and maintenance.


* travel between your assignment and home unrelated to a new assignment or travel home in between two assignments at the same place


* transportation from your apartment or hotel to the facility where you're working. Keep records of mileage and receipts for parking fees, train fares, and so on.


* records of your rent, utilities, furnishings, and any items directly associated with your housing if you're taking a stipend for it


* start-up fees for landline phones and utilities.



One thing you can toss is receipts for meals or food. The Internal Revenue Service assigns a "per diem" rate for each location. For details, check out Publication 1542 online at


Source: Joseph Smith, EA, RRT, at

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