Bank statements, W-2’s, 1099’s, invoices, sales receipts and any other documents that show money earned or received should be kept for six years. Income refers to all money you received during each year. Sources may include but are not limited to:

• wages
• dividends
• interest
• partnership distributions
• S corporation distributions
• alimony
• gambling winnings

Tax Deductions

Holding on to proof of your tax deductions is just as important as retaining proof of your income for tax estimating purposes. Any time you’re lowering your tax responsibility you can bet our government will want documentation as to why.

Mortgage interest payments, point payments and property taxes are all partially deductible; don’t lose the 1098’s your lender sends you or your real estate tax receipts. Also keep track of all improvements you make to your house as they may affect the value of the home at time of sale or appraisal. If you rent out part of your home or use it for business purposes save all documents referring to the property’s depreciation.

And don’t forget any documentation showing charitable contributions, child care credits and alimony payments.

Assets

When it comes to assets, keep hold of all documents pertaining to your home, land purchases, investments and inheritances.

For your investment assets it’s important to have documentation of the stock or bond purchase price, sale price and commission paid. The IRS has specific rules for mutual funds so be sure to look up Publication 564 on the IRS website. (www.irs.gov)

All income tax claims for items purchased using cash must be accompanied by a dated and signed copy of the receipt showing the amount paid and a description of the item or service rendered.