Recordkeeping: common requirements for personal taxes

Your Guide to State, Local, Federal, Estate + International Taxation

recordkeeping, tax, documentsRecordkeeping for your tax return is very important. It helps ensure that your tax return can be properly prepared and so that claimed items can be backed up in the event of an audit. Here are the most common records that are needed.

Tax documents

Any tax reporting forms received, including but not limited to:

  • W-2s
  • 1099s
  • Brokerage statements
  • K-1s
  • Social Security statements
  • Tuition statements

This list could go on for a while but I think you get the idea.

Expenses/itemized deductions

You should keep records of expenses that can be claimed as itemized deductions. Some of these include:

  • Medical and dental expenses (with receipts showing the dates you paid them)
  • Receipts of state income tax payments
  • Mortgage interest statements
  • Payments of real estate and personal property taxes
  • Charitable contribution letters (You should keep confirmation of all contributions you made throughout the year but are required to have letters of any contribution over $250 to deduct it.)

Other records

You must keep records of stocks, mutual funds, bonds and other similar investment property. This is usually reported in the brokerage statement (that you already have filed away because it was listed, above right?) but it sometimes includes additional information like employee stock options, for example. Retain how and when any such assets were acquired, additional shares purchased, your basis, and your sale date if applicable.

It is especially important to keep records of the basis in your home (this one tends to be forgotten). Whenever you make an improvement to your home, keep the record of your costs and support with your purchase document and update an expense sheet to help track your additional costs in your home to get your basis.

How long should I keep these records?

It is suggested that you keep your tax records for seven years before getting rid of them. I highly, highly agree with this for your protection. If you find yourself in an audit for a return that was filed four years ago, it is very hard to prove your stance on the approach you took if you no longer have records to support it.

Meghan M. Scott, EA