Despite its reputation, the Internal Revenue Service is not that evil monster waiting to take away as much of your hard-earned money as possible. It’s simply executing (maybe that’s a bad choice of words) the tax laws set into place. And it wants to help taxpayers, including a recent release titled IRS Reminds Taxpayers That Keeping Good Records Reduces Stress at Tax Time.
Not the most imaginative of titles, but certainly a good common sense message. Personally, I fail to take it into account year after year and end up scrambling to compile all the proper documents. Maybe I’ll learn my lesson this time and hopefully you will pick up a helpful pointer or two.
A few of the highlights:
Generally speaking, you should keep any and all documents that may have an impact on your federal tax return.
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
Individual taxpayers should usually keep the following records supporting items on their tax returns for at least three years:
- Credit card and other receipts
- 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
For more information about recordkeeping, check out IRS Publications: