Before you file away your tax return and all its related records, now is the time to make a final review of the material. This can be in either paper or digital form as long as you know where it is, it’s securely stored, and you feel it will meet the requirements of substantiation. Here are some tips:

The checklist

Use this checklist to help your record keeping. At a minimum, your records should include the following;

• A copy of your signed tax return and all supporting documents sent with your tax filing
• Copies of any worksheets that support your tax filing
• Canceled checks of deducted items
• Record of digital payment(s) and timing if using electronic payment systems
• Receipts supporting deducted items
• Bank statements
• Investment statements
• Form W-2s
• Form 1099s (all form types)
• Form 1095s (to support having valid health insurance)
• Mortgage statements (including annual interest paid and Form 1098)
• Form K-1 for partnerships, LLCs, or S Corporations
• Credit card statements
• Copies of any major purchases or sales (example: home closing documentation)
• Mileage logs for business, charitable and medical transportation
• Proper documentation for business meals and cell phone use
• Receipts for any charitable donations (both cash and non-cash donations)
• Support for all your itemized deductions
• Child care receipts and reporting
• Educational expenses
• Substantiation for value of large donations of property
• Proof of fair market value for any inherited items of value

Capital improvements

Now is also a good time to review your capital improvement files. Capital improvements are payments made to improve the value of your home, secondary residence, or other high value property/equipment. These records are needed to support your calculation of value and gain/loss when you sell your property. Consider creating a spreadsheet that recaps each of these expenditures.

When to toss

Don’t toss old records too soon. The typical rule is to retain federal tax records for as long as they may be needed. This is usually the later of 3 years after the filing due date or when you actually file your tax return. But be careful, state rules can differ and if your income is understated by more than 25%, the look back timeframe for a potential audit increases to 6 years. Finally, remember to keep records of fixed assets as long as you own them plus three years.