Taxpayers are required to keep tax records for a minimum of three years. However, the law allows for exceptions to this rule, especially in the case of a natural disaster, or other loss. A fire, flood, theft, or other casualty qualifies as a legitimate reason for record reconstruction and the use of estimates. Reasonable estimates may be used for tax purposes, insurance reimbursement, and FEMA aid. Here are some helpful tips to help you reconstruct your records. 1. Take photographs as soon as possible. Disposable or digital cameras are best, and keep the photos in a safe place, or, better yet, upload them into your e-mail account. 2. If you own your home, contact your title company, bank, or escrow company and request copies of your records. In the case of a damaged vehicle, use Kelly Blue Book or NADA value. You can also look up this information online. 3. Use your property tax settlement for value estimates. You can get copies from your tax assessors office. You may even be able to access your records online. Your mortgage company (bank) may also have a recent appraisal on file. 4. Check online and with local appraisal companies in order to get comps for your property. Comps are comparable sales in your area, and may be used to accurately assess value. 5. Contact the IRS and request copies of previous years tax returns. You may request transcripts of previous tax returns by filing form 4506-T. Transcripts are free, easier and faster than requesting copies of original returns, and transcripts may be requested by phone. 6. If a home improvement was made, such as a deck or a garage addition, contact your independent contractor for copies of the contract. You may also use written accounts of relatives or friends as proof that the improvement was made. 7. For personal property, use old photographs that show furniture, electronics, or other items. You can also reconstruct records by drawing a simple floorplan of each room, and documenting the items that were there. Include all rooms, garages, attics, and basement, if any. If you purchased items with a credit card, get copies of your credit card statement, and use that as a basis for the items. 8. If you need to reconstruct your W-2 forms, use an earnings statement, or W-2 forms from a prior year, then reasonably estimate your income. All of the information that you need should be listed on your earnings statements. Use form 4852 to submit an estimated W-2 form to the IRS, and estimate your wages. Reconstructing records may seem like a daunting task, but remember that the IRS allows taxpayers to make thousands of reasonable estimates every year. Every year, businesses experience thefts, fire, floods, and other disasters that destroy property and records. As long as the estimates are reasonable, and you demonstrate an honest attempt to obtain proof of those records, the IRS will allow the estimates in lieu of actual records. When in doubt, seek the advice of a tax professional, or call the IRS directly. You may be on hold for a while, but at least the call is free. Keep a record of your conversation with the IRS operator. Write down his identification number, and an outline of your conversation. Search the internet firstthe information is free, public, and may save you a lot of time and money. Many taxpayers that experience casualty losses can figure out the estimates for themselves with just a little effort and elbow grease. Be truthful, and dont be afraid to trust your judgment. Youre smarter than you think! |
