The Importance of Life-Proofing Your Tax Records

Have you ever dealt with a flood, fire or a hurricane? If you haven't, consider yourself fortunate. In addition to suffering the stress of such a catastrophe comes the practical problem of losing all of your most important documents. And while financial statements and medical records can be time-consuming to replace, tax information can be impossible to recover.

Replacement tax returns can be retrieved, but what about documentation that has no duplicates? Do you have any receipts or records for deductions purposes…information which may mean a higher tax bill if you lose it? If you're an independent contractor, you certainly want to protect those wage statements you receive throughout the year. Depending on where in the country you live, the types of potential disasters you face can vary. Regardless of where you are, though, you can take a few simple precautions to avoid a future disaster with the Internal Revenue Service.

Invest In a Safe

An unfortunate hazard that can happen anywhere you reside is a fire. As such, it may be prudent to purchase and fill a fire-proof safe with your most sensitive documents. You may wish to scan the bulk of your paperwork and then transfer the information to a disc or flash drive before you do so (helping with both organization and space). If a safe isn't in your budget at the moment, you have another secure option available to you.

Secure Your Information Elsewhere

An alternative security measure is to store back-ups of your documents somewhere other than your house, such as with a relative or trusted friend. Just make sure the individual storing your information keeps it in a secure location, preferably separate from their own sensitive files. Also, don't put yourself in a position where you would not be able to reclaim your records if necessary; in other words, make sure you have an excellent relationship with whoever you choose.

Shred Non-Essentials

You likely shred important documents before moving them to the curb for trash pick-up (if you're not, you should definitely start). Similarly, any loose paperwork that is not absolutely essential should be shredded and discarded. The reason for this is that in the event of a tornado or hurricane, the contents of your home may literally be distributed over several miles. And while you'll definitely have higher-priority concerns at the time, that won't stop unscrupulous individuals from running amok with your identity. As a preventive measure, destroy anything you don't absolutely need ahead of time.

Organize Now, Thank Yourself Later

Keeping your records secure isn't just a matter of storing them in a safe place, but also ensuring they're organized. While this can be tedious to put into practice, it will be worth the effort in a worst-case scenario. Knowing precisely where to find all of your most critical information at a moment's notice can allow you to quickly snatch it from the jaws of peril.

A Professional Umbrella

In the event that you find yourself with a tax dilemma as the result of a post-disaster loss of essential information, don't panic. You'll want to consult with a licensed tax professional right away, though, to ensure that you're presented with a fast solution. If you plan carefully, of course, you should be ready to face any calamity that might come along. Just don't forget to ask for help if you start getting a flurry of IRS paperwork following an unavoidable disaster.

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