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Recordkeeping for Tax Purposes: Which records should you keep?

Written by Stevens Group October 3, 2017

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You should keep information that you and the IRS need to determine your correct tax. Everyone should keep the following records:
 
Copies of your tax returns as part of your tax records.

  • Your tax returns can help you prepare future returns and amended returns.
  • Copies of your tax returns and other records can be helpful to your survivors or the executor or administrator of your estate.
  •  
    Proof of income and expenses. Listed below are examples of income and expense documents you should keep. The list is not all inclusive.
     
    Income
    1. Form(s) W-2, 1099, and K-1
    2. Bank and brokerage statements
    3. Business and hobby income
     
    Expenses reported on tax return
    1. Sales slips, invoices, receipts
    2. Cancelled checks or other proof of payment
    3. Details of cash and noncash contributions including written communications from qualified charities
     
    Your Home
    1. Closing statements, including any refinance, purchase and sale documents
    2. Receipts for improvements
    3. Insurance records
     
    Investments
    1. Brokerage and mutual fund statements along with basis documentation
    2. Form(s) 1099 and 2439
    3. Forms 1099-R, 5498, and 8606 for each year until all IRA funds have been distributed
     
    Records for Special Situations
    1. Alimony
     
    If you pay or receive alimony, keep a copy of your written separation agreement or the divorce, separate maintenance, or support decree and your former spouse’s Social Security number
     
    Business use of your home
    1. Keep records that show which part of your home is used for business and the expenses related to that use. Child care providers should also keep track of hours open for business, as well as hours spent in preparation and clean up
     
    Gambling. Keep an accurate diary of winnings and losses
    1. Required information includes: – Date and type of gambling activity – Gambling establishment name and address, and names of persons present with you. – Amount you won or lost
     
    Tax credits. Each tax credit includes special record requirements. Examples include:
    1. Provider’s name, address, and taxpayer ID number for the Child and Dependent Care Credit
    2. Physician’s certification for the Credit for the Elderly or the Disabled
    3. School records for the education credits
    4. Vehicle records if you use your own car for business, medical transportation, or qualifying volunteer work
     
    Keep a mileage log with the date, destination, and purpose of each trip.
     
    You also need to know how many miles you drove for other purposes, such as commuting and personal use
     
    Your vehicle records should include purchase or lease papers and loan records

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