Tax Tips

Good recordkeeping will save you time when preparing your taxes. Learn which items to save when prepping for tax season.

How long should I keep my records for tax purposes?

You should keep your records a minimum of 3 years, but our tax professionals recommend a minimum of 7 years. Even though you may not need these records for tax purposes, you may wish to maintain them for proof to creditors or for use in insurance claims. The IRS does recommend that you keep copies of your W-2 forms until you're eligible for retirement in case there's a discrepancy. Check with your tax professional for more information on record keeping.

What records should I keep?

• General financial documents: You should keep pay stubs, W-2 forms, records of tips earned, receipts for big-dollar items such as the purchase or sale of an automobile or home, records of investments along with contributions to retirement accounts, bank and brokerage statements, and 1099 forms.
• Receipts for deductible items: When making payments toward a deductible item by credit card, electronic funds transfer or check, you'll need to record the check number, dollar amount, payee's name and date of the transaction. If you make a payment in cash, you should get a signed and dated receipt showing the amount and reason for the payment.
• Insurance and medical records: Hold on to papers regarding insurance claims and medical expenses along with dates and specifics as to what was paid for and when.
• Theft or loss documentation: Theft loss should be documented, including value, the date the property was first noticed missing and proof that it was yours.
• Gambling records: Gambling records should state the type of gambling activity, the amount won or lost, address or location of the establishment, names of others present with you and the date.
• Charitable records: Charitable contributions of goods or services totaling more than $75 require a receipt. You can deduct a cash donation only if you have a cancelled check, a bank statement containing the name of the charity, date, and amount or written confirmation from the charity. Be sure to log out-of-pocket expenses for charitable work such as mileage, parking fees, tolls, and bus or taxi fares. Also record the name of the charity, the date of the expense and the amount.
• Self-employment records: If you are self-employed or use your home for business, you'll need to keep a special set of records. Consult with a tax professional for additional information.

It's a good idea to keep your records in order by date and broken down by category. Organizing your receipts, pay stubs and various financial forms as the year goes along will make it easier to file your tax return. It's a good idea to use a folder, envelope or binder to keep all of your records for the tax year together and then store these yearly files away in boxes or on shelves for later reference.