What to Keep and How Long

As an individual taxpayer, you are required to keep accurate records during the year. The Internal Revenue Service and courts require contemporaneous records be maintained to substantiate tax deductions and credits. Keeping detailed records of your ministry expenses will help you prepare accurate and complete tax returns. Detailed records will also serve as documentation of the accuracy of your returns if you are audited.

The length of time you should keep a document depends on the action, expense, or event the document records. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out.

The IRS generally has three years after a tax return is filed to audit that tax return and to assess additional tax. However, if there is a substantial omission of gross income on the tax return – 25 percent or more – the IRS has six years after the tax return is filed to audit that tax return and to assess additional tax. The IRS can also assess tax at any time if no tax return is filed, or if there is fraud or an attempt to evade the tax on the return that was filed.

Which records are important?

  • Income
    • Form(s) W-2
      Form(s) 1099
      Bank statements
      Brokerage statements
      Form(s) K-1
      Other income reported on your tax return
  • Expenses
    • Sales slips
      Canceled checks or other proof of payment
      Mileage logs
      Medical expenses
      Charitable contributions
      Brokerage statements relating to IRA or Roth contributions
      Other expenses reported on your tax return
  • Home
    • Closing statements
      Purchase and sales invoices
      Proof of payment
      Insurance records
      Interest and taxes paid
      Housing expenses
      Church minutes or pension designating housing allowance
  • Investments
    • Brokerage statements
      Mutual fund statements
      Form(s) 1099

What should I do with my records for nontax purposes?

When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes.  For example, your insurance company or creditors may require you to keep them longer than the IRS does.