By Richard Lipton, CPA
Some natural disasters are more common in the summer. But major events such as hurricanes, tornadoes and fires can strike at any time, so it’s a good idea to plan for what to do in case of a disaster. You can help make your recovery easier by keeping your tax and financial records safe. Here are some basic steps you can take now to prepare:
1. Backup Records Electronically
Many people receive bank statements by email. This is a good way to secure your records. You can also scan tax records and insurance policies onto an electronic format. You can use an external hard drive, CD or DVD to store important records. Be sure you back up your files and keep them in a safe place. If a disaster strikes your home, it may also affect a wide area. If that happens you may not be able to retrieve your records.
2. Document Valuables
Take photos or videos of the contents of your home or business. These visual records can help you prove the value of your lost items. They may help with insurance claims or casualty loss deductions on your tax return. You should store them with a friend or relative who lives out of the area. The IRS has a disaster loss workbook, Publication 584, which can help taxpayers compile a room-by-room list of belongings.
3. Update Emergency Plans
Review your emergency plans every year. Personal and business situations change over time, as do preparedness needs, so update them when your situation changes. Make sure you have a way to get severe weather information and have a plan for what to do if threatening weather approaches. In addition, when employers hire new employees, or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.
4. Get Copies of Tax Returns or Transcripts
Use Form 4506, Request for Copy of Tax Return, to replace lost or destroyed tax returns or need information from your return. You can also file Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript or Form 4506-T, Request for Transcript of Tax Return. Don’t hesitate to contact us if you need assistance filling this form out.
5. Check on Fiduciary Bonds
Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.
Richard Lipton, CPA
The founder of Richard L. Lipton CPA & Associates LLC, located in Morris Plains, N.J., Richard has been a stockholder and manager of family-owned Sam’s Tire Co. in Paterson, N.J., for 10 years. His firm offers business consulting, tax and accounting services – including the area of forensic accounting – to large and small clients. Visit Richard L. Lipton CPA & Associates LLC online at www.liptoncpa.com.
Article courtesy of TIRE REVIEW.
