What Records You Need to Back Up Your Tax Return

Keeping records to back up your tax returns is essential in case of an IRS audit.

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When you file your taxes with the IRS, you don't need to send in any of the records you used to figure out your taxes and substantiate your deductions. However, you are required to keep these records. You'll need them in the event you're audited by the IRS. By far the main reason taxpayers lose IRS audits is because they don't have the proper records.

Records to Keep with Your Tax Return

Here is a list of records to save, along with a copy of your return:

  • copies of all the W-2 forms your employer or employers sent you for the year
  • all Form 1098s you received from financial institutions reporting the mortgage interest you paid during the year
  • all 1099 forms you received reporting various payments to the IRS: this includes Form 1099-MISC reporting payments to you as an independent contractor; Form 1099-INT reporting interest you received from financial insinuations; and Form 1099-DIVs you received from payers of dividends
  • Schedule K-1s showing your share of income or loss from partnerships, S corporations, trusts, and estates in which you have an interest
  • statements you received from brokerage firms and mutual fund companies that are not 1099s
  • Written acknowledgments from the charities involved of all the charitable contributions you made during the year
  • records substantiating all of your business-related travel, entertainment, and car expenses--for example, a mileage log showing your business driving, your appointment book, and receipts
  • canceled checks and credit card statements showing that you paid for expenses you've deducted on your return
  • proof that you filed your return--if you filed electronically, this is the IRS email acknowledging that your e-filed return was been accepted for processing.

How Long to Keep Your Records

You should keep your records for as long as the IRS has to audit you after you file your returns for the year. These statutes of limitation range from three years to forever—they are listed in the table below.

To be on the safe side, you should keep your tax returns indefinitely. They usually don’t take up much space, so this is not a big hardship. You might need them for purposes other than dealing with the IRS—for example, to get a loan, mortgage, or insurance.

Your supporting documents probably take up more space. You should keep these for at least six years after you file your return. Keeping your records this long ensures that you’ll have them available if the IRS decides to audit you.

Keep your long-term asset records for three years after the depreciable life of the asset ends. For example, keep records for five-year property (such as computers) for eight years.

If:

The IRS statute of limitations period is:

you failed to pay all the tax due

 

3 years

you underreported your gross income for the year by more than 25%

6 years

you filed a fraudulent return

 

no limit

you did not file a return

no limit

March 2013

by: , J.D.

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