tax records in a filing system

Cook and Co. Enrolled Agents are licensed by the U.S. Treasury Department to represent taxpayers before the Internal Revenue Service (IRS).

Keeping Tax Records

You can avoid headaches at tax time by keeping track of your receipts and other records throughout the year. Good recordkeeping will help you remember the various transactions you made during the year, which in turn may make filing your return a less taxing experience.

Records help you document the deductions you've claimed on your return. You'll need this documentation should the IRS select your return for examination. Normally, tax records should be kept for three years, but some documents " such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property " should be kept longer.

In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.

Good recordkeeping throughout the year saves you time and effort at tax time when organizing and completing your return. If you hire a paid professional to complete your return, the records you have kept will assist the preparer in quickly and accurately completing your return.

Attention to detail is critical.

files and records
Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out.

The time you are required to keep records includes the period of time during which you can amend your tax return to claim a credit or refund, or that the IRS can assess more tax. The following situations contain the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date.

Are the records connected to assets?

Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.

Example: You write a $4,000 check for hardwood flooring in a rental house in 2003. In 2011 you sell the rental property. The IRS may audit your 2011 return in 2012, 2013 or 2014, and you may need to prove that expenditure, because the flooring was set up on depreciation over 27 1/2 years and had some remaining un-depreciated basis at the time you sold the property.

1 Year3 Years6 YearsForeverSpecial Circumstances
Bank StatementsCredit Card StatementsSupporting Documents For Tax ReturnsCPA Audit ReportsCar Records (keep until the car is sold)
Paycheck StubsMedical BillsAccident Reports and ClaimsLegal RecordsCredit Card Receipts (keep until verified on your statement)
Canceled checksUtility RecordsMedical Bills (if tax-related)Important CorrespondenceInsurance Policies (keep for the life of the policy)
Monthly and quarterly mutual fund and retirement contribution statementsExpired Insurance PoliciesProperty Records / Improvement ReceiptsIncome Tax ReturnsMortgages / Deeds / Leases (keep 6 years beyond the agreement)
... ...Sales ReceiptsIncome Tax Payment ChecksPay Stubs (keep until reconciled with your W-2)
... ... Wage GarnishmentsInvestment Trade ConfirmationsProperty Records / improvement receipts (keep until property sold)
... ...Other Tax-Related BillsRetirement and Pension RecordsSales Receipts (keep for life of the warranty)
1 Year3 Years6 YearsForeverSpecial Circumstances
Correspondence with Customers and VendorsBank Statements and ReconciliationsAccident Reports, ClaimsCPA Audit ReportsCar Records (keep until the car is sold)
Duplicate Deposit SlipsEmployee Personnel Records (after termination)Accounts Payable Ledgers and SchedulesLegal RecordsCredit Card Receipts (keep until verified on your statement)
Purchase Orders (other than Purchasing Department copy)Employment ApplicationsCancelled ChecksImportant CorrespondenceInsurance Policies (keep for the life of the policy)
Receiving SheetsExpired Insurance PoliciesEmployment Tax RecordsIncome Tax ReturnsMortgages / Deeds / Leases (keep 6 years beyond the agreement)
RequisitionsGeneral CorrespondencePayroll Records and Summaries, including payment to pensionersIncome Tax Payment ChecksPay Stubs (keep until reconciled with your W-2)
Stenographer's NotebooksInternal Audit Reports Sales RecordsInvestment Trade ConfirmationsProperty Records / improvement receipts (keep until property sold)
Stockroom Withdrawal FormsTime Cards For Hourly EmployeesTravel and Entertainment RecordsRetirement and Pension RecordsSales Receipts (keep for life of the warranty)
Have a question about record retention? Talk to one of our experts.
Buddy Fricke, EA

Buddy Fricke, EA

Accredited Tax Advisor

Buddy Fricke, EA

Accredited Tax Advisor
Buddy Fricke, EA

Buddy is a graduate of Auburn University. He holds a Bachelor of Science degree in Mathematics.

Direct Phone: (256) 586-4141
Mary L. Penton, EA

Mary L. Penton, EA

Tax Department

Mary L. Penton, EA

Tax Department
Mary L. Penton, EA

Mary is a graduate of the University of Alabama Huntsville. She holds a Bachelor of Science in Accounting.

Direct Phone: (256) 586-4135
Anthony Nash, CPA

Anthony Nash, CPA

Chartered Global Management Accountant

Anthony Nash, CPA

Chartered Global Management Accountant
Anthony Nash, CPA

Anthony is a graduate of the University of Alabama in Tuscaloosa. He holds a Bachelor of Science in Accounting.

Direct Phone: (256) 586-4153
Jonathan R. Neighbors, EA

Jonathan R. Neighbors, EA

Tax Department

Jonathan R. Neighbors, EA

Tax Department
Jonathan R. Neighbors, EA

Jonathan is a 2005 graduate of the University in Tuscaloosa. He received a Bachelor of Science degree in Accounting.

Direct Phone: (256) 586-4157