Well-organized records will make it easier to prepare your tax return and will help you answer questions if your return is selected for examination, or you are billed for additional tax.

Records such as receipts, canceled checks, and other documents that support an item of income or a deduction appearing on your return should be kept until the statute of limitations expires for that return. Usually this is 3 years from the date the return was due or filed, or 2 years from the date the tax was paid, whichever is later. There is no statute of limitations when a return is fraudulent or when no return is filed.

You should keep some records indefinitely, such as property records. You may need them to prove the amount of gain or loss if the property is sold. Generally, income tax returns should be kept for 3 years. They could help you prepare future tax returns or amend a return. For more information on record keeping requirements for individuals, download Publication 552 Record Keeping for Individuals.

If you are an employer, you must keep all your employment tax records for at least 4 years after the tax is due or paid, whichever is later.

If you are in business, there is no particular method of bookkeeping you must use. However, you must use a method that clearly reflects your income and expenses, such as expenses for travel, entertainment, gifts, and cars. The records should substantiate your expenses.

The documentation you should keep for each of these expenses can be found in Publication 583, Starting a Business and Keeping Records, and Publication 463, Travel, Entertainment, Gift, and Car Expenses. Publications can be downloaded from this site, or ordered by calling 1-800-829-3676.

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