Why should I keep tax records?
While it behooves you to keep tax records in general in the interest of organization and peace of mind, you may need records for other purposes, including insurance and loans. By having complete records, you’ll be able to identify sources of income, monitor your expenses, prepare tax returns more efficiently, and support the contents of your tax returns.

How long should I keep my tax records?
It’s important that you keep your records as long as they may be needed for any provision of the Internal Revenue Code. Bottom line: you need to keep records that support the items shown on your return until the period of limitations for that return (the time in which you are eligible for a credit, refund, or additional tax) has expired.

What kinds of records should I keep?
Basic Records – Proof of Income and Expenses

A basic record of your income corroborates the amounts that you report on your tax return, including wages, dividends, interest, and more. Additionally, it’ll help you to track any non-taxable income.

These documents may include:

  • Form(s) W-2
  • Form(s) 1099
  • Bank statements
  • Brokerage statements
  • Form(s) K-1

Having a basic record of your expenses may allow you to claim deductions or credits, including things like alimony, charitable contributions, mortgage interest, and real estate taxes, as well as — in some cases — additional expenses like child care and Affordable Care Act documents.

Keeping a basic record will help you determine the basis or adjusted basis of your home’s value, as well as additional factors such as appreciation or depreciation. Furthermore, you should keep a record of your home’s sale price, including any additional expenses.

These documents may include:

  • Closing statements
  • Purchase and sales invoices
  • Proof of payment
  • Insurance records
  • Receipts for improvement costs

From stocks and bonds to mutual funds, your investment records need to demonstrate whether you have a gain or loss when you’ve sold a particular investment. These records should be comprehensive, and include purchase price, sale price, and commission (if any).

These documents may include:

  • Brokerage statements
  • Mutual fund statements
  • Form(s) 1099

Proof of Payment:
Whether a cash receipt, financial account statement, credit card statement, canceled check, or otherwise, proof of payment records will help you support certain parts of your tax return.

Specific Records:
There are a variety of documents that can help you achieve peace of mind and make paying taxes an easier process. These documents may include:

  • Alimony
  • Business use of your home
  • Casualty and theft losses
  • Child care credit
  • Contributions
  • Credit for the elderly or the disabled
  • Education expenses
  • Exemptions
  • Employee business expenses
  • Energy incentives
  • Gambling winnings and losses
  • Health Savings Account (HSA) or Medical Savings Account (MSA)
  • Individual Retirement Arrangements (IRAs)
  • Medical and dental expenses
  • Mortgage interest
  • Moving expenses
  • Pensions and annuities
  • Taxes