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Category: Personal Information

What Tax Records to Keep

You probably already keep records in your daily routine. This includes keeping receipts for purchases and recording information in your checkbook. Keeping these and other records will help you avoid headaches at tax time. Good record keeping will help you remember the various transactions you made during the year, which in turn, may make filing your return a less taxing experience.

Records help you document the deductions you have claimed on your return. You will need this documentation should the IRS select your return for examination. Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.

In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return. Basic Records that you should keep are broken down into four (4) main categories:

  • Income
    • Form(s) W-2
    • Form(s) 1099
    • Bank statements
    • Brokerage statements
    • Form(s) K-1
  • Expenses
    • Sales slips
    • Invoices
    • Receipts
    • Canceled checks or other proof of payment
    • Written communications from qualified charities
  • Home
    • Closing statements
    • Purchase and sales invoices
    • Proof of payment
    • Insurance records
    • Receipts for improvement costs
  • Investments
    • Brokerage statements
    • Mutual fund statements
    • Form(s) 1099
    • Form(s) 2439

Good record keeping throughout the year saves you time and effort at tax time when organizing and completing your return.

For more information on what kinds of records to keep, see IRS Publication 552, Record keeping for Individuals, which is available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).