Once you've filed
your 2009 tax return, you may wonder which records you should keep and
which ones you can run through the shredder. Here are a few
suggestions.
If the IRS asks, you must be able to prove
the validity of your tax return, which includes providing
substantiation for each item reported on your tax return.
Here's a list of the most common records you
need to keep:
* W2s, 1099s, and other records of income
received.
* Receipts, cancelled checks, and other
documentation for deductions taken.
* Written acknowledgments for charitable
contributions.
* Records related to home improvements,
sales, and refinances.
* Investment purchase and sales information,
including brokerage statements.
* Records on IRAs and other retirement plans.
The IRS does not require that you keep your
records in any particular way. The only requirement is that your
records allow you and the IRS to determine your correct tax liability.
So the key is to keep checks, receipts, and other records that document
the income and deductions you've put on your tax return.
Wondering how long you need to keep these
records?
Keep tax records for as long as your return
is subject to an IRS audit. Unless fraud, evasion, or a substantial
understatement of income is involved, the IRS generally has only three
years in which to question your return.
Because of various combinations of the
statute of limitations and technical provisions in the law, keep
records related to a specific tax return for seven years, rather than
just for three years. If a record will affect future years, you may
need to keep it even longer. And copies of tax returns should be kept
permanently.
