Keeping Records

INTRODUCTION

  • INCOME AND LOSSES - Retain 5 years

  • Form W-2s (salaries and wages)

  • Form W-2Ps (monthly pension distributions)

  • 1099 (self-employment income, royalties, lump sum payments, capital gains and losses)

  • Schedule K-l (income and losses from partnerships and trusts)

 

HOUSING

  • Form 1098 (mortgage interest). Retain 5 years.

  • Receipts showing capital improvements you've made to your home. Retain forever or 5 years after the sale of the property.

 

RENTAL PROPERTY EXPENSES

  • Real estate tax bills. Retain 5 years.

  • Itemized receipts for repairs and maintenance. Retain 5 years.

  • Escrow documents to backup depreciation deductions. Retain 5 years after the sale of the property.

 

INTEREST PAID

  • Copies of promissory notes. Retain 5 years after note is paid off.

  • Year-end credit card statements. Retain 5 years.

 

DEPENDENT-CARE PAYMENTS - Retain 7 years

  • Cancelled checks and statements from baby-sitters or childcare organizations, plus proof of the care provider’s taxpayer identification number, if a tax credit has been claimed for such expenses.

 

TAXES

  • Copies of all federal, state and local returns. Retain forever.

  • Tax bills and receipts. Retain 5 years.

  • Charitable Contributions. Retain 5 years.

  • Receipts (or a diary) for all donations.

  • Professional appraisal report for any non-cash item over $5,000.

  • Written acknowledgment from the charity for contributions of $250 or more.

 

BUSINESS EXPENSES - Retain 5 years

  • For business expenses less than $25-taxis, tolls, parking fees, etc.-a simple listing in a log or diary will do. For expenses $25 or more, save actual receipts.

  • Credit card receipts and ticket stubs (annotated with the business purpose of the expense).

  • Driving log showing where you started and ended your trips, the mileage and the purpose of the trip.

 

MEDICAL EXPENSES - Retain 5 years

  • Doctor, dentist and hospital bills

  • Prescription receipts

  • Receipts for travel and lodging expenses incurred while seeking treatment

 

MISCELLANEOUS EXPENSES - Retain 5 Years

  • Unreimbursed business expenses, union dues, investment advice and more

 

Generally you should save both your tax returns and all your supporting documents for at least five years after you file. Actually, if you have the space, never throwing away tax information (or at least the tax returns themselves) probably is a good idea, since there is no statute of limitations on an IRS audit if they allege possible fraudulent filing. The retention times indicated here are in reference to Federal Returns only. State regulations will vary.