Frequently Asked Tax Questions

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• Copy of previous year personal tax return
• Copy of your driver’s license (IRS requires for identity protection)
• W-2’s, 1099’s, and K-1s 
• Rental or investment income tax docs
• Mortgage interest statement, if applicable
• Children’s name, birth date, and social security number
• List of donations
• Property tax documents
• Student loan interest (if applicable)
• Childcare expenses (if applicable)
• Medical expenses (if applicable)
• Self-employed business income & deductions

Keep records for all your current year income and deductible expenses. These are the records that an auditor will ask for if the IRS selects you for an audit. 

The tax records and receipts you should keep relate to your current year income and deductions: 

• Income (Wages, interest, dividends, etc.) 
• Exemptions (Cost of support) 
• Medical Expenses 
• Taxes 
• Interest Expense
• Charitable Contributions 
• Childcare
• Business Expenses 
• Professional and Union Dues 
• Uniforms and Job Supplies 
• Education - if it is deductible 
• Automobile - if used for deductible activities (i.e., business or charity) 
• Travel - if you travel for business and can deduct the costs

Keep your bank account and loan records too, even though you do not report them on your tax return. If the IRS believes you have under-reported your taxable income because your lifestyle appears to be more comfortable than your taxable income allows, having these bank and loan records may be what saves you.

Keep records of your current year's income and expenses for as long as you may be called upon to prove the income or deduction if you are ever audited.

For federal tax purposes, this is generally three years from the date you file your return (or the date it is due, if that is later), or two years from the date you pay the tax that is due, if the date you pay the tax is later than the due date. IRS requirements for record keeping are as follows:

1) You owe additional tax and situations (2), (3), and (4), below, do not apply to you - keep records for 3 years

2) You do not report income that you should report, and it is more than 25% of the gross income shown on your return - keep records for 6 years

3) You file a fraudulent return - keep records indefinitely

4) You do not file a return - keep records indefinitely

5) You file a claim for credit or refund after you file your return - keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later

6) You file a claim for a loss from worthless securities or bad debt deduction - keep records for 7 years

7) All employment tax records – keep for 4 years after the date that the tax became due or was paid, whichever is later

Yes, yes, yes!  Keep your old tax returns.

One of the benefits is looking back at last year's return when preparing this year's return.  It helps remind you of deductions you may have forgotten.  

Another reason is if the IRS calls you for an audit, the examiner will most likely ask you to bring your tax returns for the last few years. You would think the IRS would have them handy, but that's not the way it works. More than likely, your old returns are stored in a computer, in a storage area, or on microfilm somewhere. Usually, your IRS auditor has just a report detailing the reason the computer picked your return for the audit. So having your old returns allows you to easily comply with his/her request. 

You may want to keep your old returns forever, especially if they contain information such as the tax basis of your house. Probably, though, keeping them for the previous three or four years is sufficient.

If you throw out an old return that you find you need, you can get a copy of your most recent returns (usually the last 6 years) from the IRS. Complete Form 4506 (Request for Copy or Transcript of Tax Form), send it with the required small fee to the IRS Service Center where you filed your return.

You need to keep some receipts because they show how much you paid for something that you may sell later. 

Keep the following types of records for as long as you own the item:

• Records of capital assets (i.e., coin, antique collections, jewelry, stocks, bonds) 
• Records regarding the purchase and improvements to your home
• Records regarding the purchase, maintenance, and improvements to your rental or investment property

There are other, seemingly unrelated, records you should keep:

• Insurance policies - to show whether you were to be reimbursed in case you suffer a casualty or theft loss, have medical expenses, or have certain business losses
• Record of major purchases - in case you suffer a casualty or theft loss, contribute something of value to a charity or sell it
• Family records (marriage licenses, birth certificates, adoption papers, divorce agreements) - to prove change in filing status or dependency exemption claims
• Certain records that give a history of your health and any medical procedures - to prove that a certain medical expense was necessary