Tax Guide |
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Everyone who pays taxes is required to keep accurate, permanent books and records. Income, expenses, gains, losses, and other items that affect income tax liability must be accurately accounted for.
You should retain basic records showing the source of all income you receive, including W-2 forms, 1099 and 1098 forms, and year-end comprehensive statements from financial institutions.
For any deductible item, you should retain documents proving the expense itself (a receipt, bill, or invoice) and proving that you paid it (a canceled check, credit card slip, or bank statement itemizing your checks).
If you are claiming employee business expenses, the recordkeeping rules for each type of expense are the same as those that apply to business owners, as discussed above, although the reporting requirements are different.
If you receive or pay alimony, you should keep a copy of the separation agreement or divorce decree.
If you are claiming the child care credit, you must keep records of the name, address, and Social Security number or employer identification number of all caregivers.
If you are claiming deductions for charitable contributions, you may need to get a receipt from the organization to which you made the donation, or an appraisal of the item.
If you have gambling winnings, you should be keeping a diary of your winnings and losses that includes the date, type of activity, and location of the establishment, the names of other people who were present, and the amount you won or lost.
Special recordkeeping rules apply to the following:
How long should your records be kept?All of these records must be kept as long as they may be relevant for any tax purpose, or for a minimum of four years. Records for capital assets, such as your house or investment property, should be kept for as long as you own the assets because you need them to determine your taxable gain or loss when you sell the property. After the sale of the property, you should keep the records for at least four years.
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