Recordkeeping Tips and Strategies

I am often asked “how long should I keep my records?” As our closets and storage areas fill up with boxes and files, I can totally understand the desire to haul some of those records over to the shredder. Below are tips from the IRS, which is a good starting point, but, keep in mind that if you’re going to be audited, it may be 3 years from when you filed your tax return that you receive the notice. For example, 2008 tax returns are currently being examined. That being said, I would add another 3 years to the recommendations:

Here are a few things the IRS wants you to know about recordkeeping.

1. In most cases, the IRS does not require you to keep records in any special
manner. Generally, you should keep any and all documents that may have an impact
on your federal tax return. It’s a good idea to have a designated place for tax
documents and receipts.

2. Individual taxpayers should usually keep the following records supporting
items on their tax returns for at least three years:

  • Bills
  • Credit card and other receipts
  • Invoices
  • Mileage logs
  • Canceled, imaged or substitute checks or any other proof of payment
  • Any other records to support deductions or credits you claim on your return

You should normally keep records relating to property until at least three
years after you sell or otherwise dispose of the property. Examples include:

  • A home purchase or improvement
  • Stocks and other investments
  • Individual Retirement Arrangement transactions
  • Rental property records

3. If you are a small business owner, you must keep all your employment tax
records for at least four years after the tax becomes due or is paid, whichever
is later. Examples of important documents business owners should keep
Include:

  • Gross receipts: Cash register tapes, bank deposit slips, receipt books,
    invoices, credit card charge slips and Forms 1099-MISC
  • Proof of purchases: Canceled checks, cash register tape receipts, credit
    card sales slips and invoices
  • Expense documents: Canceled checks, cash register tapes, account statements,
    credit card sales slips, invoices and petty cash slips for small cash payments
  • Documents to verify your assets: Purchase and sales invoices, real estate
    closing statements and canceled checks

For more information about recordkeeping, check out IRS Publication 552,
Recordkeeping for Individuals, Publication 583, Starting a Business and Keeping
Records, and Publication 463, Travel, Entertainment, Gift, and Car Expenses.
These publications are available at www.IRS.gov or by calling 800-TAX-FORM
(800-829-3676).

Links:

  • Publications 552, Recordkeeping for Individuals (PDF)
  • Publications 583, Starting a Business and Keeping Records (PDF)
  • Publication 463, Travel, Entertainment, Gift, and Car Expenses (PDF)
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