Good recordkeeping will save you time when you’re doing your taxes. Also, if the IRS has any questions, good records will help you explain your return.
It’s a good idea to organize your records by date and category. Organizing your receipts, pay stubs, and various financial forms during the year will make it easier to get the numbers you need when you file your return.
You can find software programs designed to help you maintain records. However, you still should hold on to original receipts and tax forms. It’s a good idea to use a folder, envelope, or binder to keep all your records for the tax year together.
The IRS requires you to keep your records a minimum of three years, but we recommend a minimum of seven years. Though you might not need these records for tax purposes, you might use them as proof to creditors or for information if you file insurance claims. The IRS recommends you keep your W-2 copies until you’re eligible for retirement in case there’s a discrepancy.
Records you should keep include:
General financial documents:
- Pay stubs
- Records of tips earned
- Receipts for big-ticket items, like the purchase or sale of vehicle or home
- Records of investments and contributions to retirement accounts
- Bank and brokerage statements
- Forms 1099
Receipts for deductible items:
- When you make payments toward a deductible item by credit card, electronic funds transfer, or check, you should record the:
- Check number
- Dollar amount
- Payee’s name
- Date of transaction
- If you make a payment in cash, you should get a signed and dated receipt showing the amount and reason for the payment.
Insurance and medical records — Keep papers regarding insurance claims and medical expenses. These papers should include dates and details of what was paid for and when.
Theft or loss documentation — For a theft or loss, document:
- Value of lost or stolen property
- Date you first noticed the property missing
- Proof it was yours
You should also keep insurance or appraisal information and police reports.
Gambling records — Follow these IRS guidelines to prove gambling winnings and losses:
- Keep an accurate diary or similar record you regularly maintain. The diary should contain this information:
- Date and type of specific wager or wagering activity
- Name of gambling establishment
- Address or location of gambling establishment
- Name(s) of person(s) with you at the gambling establishment
- Amount won or lost
- Keep verifiable documentation, which includes:
- Wagering tickets
- Canceled checks
- Credit records
- Bank withdrawals
- Statements of winnings or payment slips the gambling establishment provides
- When possible, keep documents to support the placement and settlement of a wager, including:
- Hotel bills
- Airline tickets
- Gasoline credit cards
- Affidavits or testimony from responsible gambling officials about your wagering activity
Charitable records — For every cash donation you make, regardless of the amount, you must keep a record of the donation. The IRS will accept as proof of your donation:
- Canceled check or bank copy of check
- Credit card receipt
- Bank statement
- Written communication from the charity showing the:
- Charity’s name
- Donation date
- Donation amount
However, for cash donations of $250 or more, the charity also must give you a written acknowledgment of the donation.
For property (noncash donations), you’ll need a receipt from the charitable organization showing the:
- Charity’s name
- Date and location of donation
- Description of donated item
For donations with a fair market value (FMV) of $250 or more:
- You’ll also need written acknowledgement of the donation.
- You might need an appraisal, depending on the value and condition of the property.
Also, track your out-of-pocket expenses for charitable work you do. Keep records of your:
- Parking fees
- Bus and taxi fares
For each item, write down the:
- Charity’s name
- Date of expense
- Expense amount
Self-employment records — If you’re self-employed or use your home for business, you’ll need to keep detailed records of your expenses and income.
To learn more, see Publication 334: Tax Guide for Small Business at www.irs.gov.
Do you wish you had a tax pro to double check your online tax return? Tax Pro Review is here to do just that. Visit the H&R Block blog for more details.
Save on your tax bill by learning more about the energy efficient tax credits available to you with help from the tax experts at H&R Block.
Is your relative a qualifying dependent? Explore your options for claiming relatives on your taxes. Get tax answers from H&R Block.
For individual taxpayers, Schedule A is used in conjunction with Form 1040 to report itemized deductions. If you choose to claim itemized deductions instead of the standard deduction, you would use Schedule A to list your deductions. Your itemized total is then subtracted from your taxable income.