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What Documents Should Be Kept For Tax PurposesWhat Documents Should Be Kept For Tax Purposes
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According to our survey of the IRS rules it's best to keep your records, which includes supporting documentation, for 7 years.
"Supporting documentation" includes:
Credit card statements: Save any credit card receipts that you have used in preparing your tax return. If your "premium" credit card sends you an annual rundown of your charges and that rundown jives with your monthly statements you could shred the monthly statements.
Medical bills: Some of your expenses not covered by your personal or employment health plan may be deductible. Save all documentation until you ascertain their tax deductibility.
Pay stubs: Save all of your stubs during the year. Make sure your end of the year stub has an accurate tally of the taxes you paid during the year. If your year-end stub is an accurate reflection of income and tax deductions for the year you may shred the monthly statements.
Investment expenses: Your records should enable you to determine your basis in an investment and whether you have a gain or loss when you sell it. Investments include stocks, bonds, and mutual funds. Your records should show the purchase price, sales price, and commissions. They may also show any reinvested dividends, stock splits and dividends, load charges, and original issue discount (OID).
Mortgage interest: If you paid mortgage interest of $600 or more, you should receive Form 1098. Keep this form and your mortgage statement and loan information in your records.
Home repairs and improvements: Some repairs or improvements may qualify as a tax deduction. Others may not qualify, but may be very helpful when calculating the cost basis for your home when you sell it. Keep all these documents with your tax records, and keep them until you sell your home. If you sell before 7 years, keep the deducted repairs with your tax records for 7 years.
Alimony: If you receive or pay alimony, you should keep a copy of your written separation agreement or the divorce decree. Also keep records of your separation maintenance costs, or the support decree. If you pay alimony, you will also need to know your former spouse's social security number.
Child care credit: You must give the name, address, and taxpayer identification number for all persons or organizations that provide care for your child or dependent. You can use Form W-10 or various other sources to get the information from the care provider. Keep this information with your tax records.
Charitable contributions: The kinds of records you must keep for charitable contributions depend on the amount of the contribution and whether the contribution is in cash.
Generally, if you make a charitable contribution that is more than $75 and is partly for goods or services, the organization must give you a written statement that you should keep.
Cash contributions include those paid by cash, check, credit card, or payroll deduction. For each cash contribution, you must keep one of the following:
You can deduct a contribution of $250 or more only if you have a written acknowledgment of your contribution from the organization.
Taxes: Your Form W–2 shows the state income tax withheld from your wages. If you made estimated state income tax payments, you need to keep a copy of the form. You also need to keep copies of your state income tax returns.
Gambling: You must keep an accurate diary of your winnings and losses. Your gambling diary should include:
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