What do I need to keep for tax reasons?
It is a good idea to keep all of your receipts and any other records that you may have of your income and expenses. These will come in very handy if you are audited. It is best to hold on to these records for at least 7 years.
How should I separate and organize these?
It is advantageous to categorize your expenses:
- Income
- Exemptions
- Medical Expenses
- Taxes
- Business Expenses
- Education
- Travel
- Auto
How long should I hold onto these documents?
It is recommended that you keep these documents for three to four years. Check the Retention Guide on this site for additional details.
How long should I keep old tax returns?
If you are audited, it is very likely that the auditor will ask to see the last few tax returns. It is recommended to keep these tax returns forever.
An added benefit of keeping your tax returns is that you can see what you claimed last year, allowing you to adjust for the current year.
What other records should I keep?
If you purchased goods that you plan to sell later, you should keep the receipts to calculate your gain or loss on it correctly.
- Anything regarding the property you own and any fixes and repairs that you perform.
- Receipts for any jewelry or other valuable collector’s items
- Records for capital assets, stocks, bonds and such
What recordkeeping system should I have?
If you are an employee of a company, your system needn’t be complex – you can keep your records separated in folders.
If you are a business owner, you may want to consider hiring a bookkeeper or accountant. Check the Financial Guide for Business on this website.