How long should I keep my tax records?

The IRS requires every taxpayer to keep records for everything you claim on your return. If you don't have records, the IRS will not allow you to claim it. Generally, you should keep your personal (not business) tax records for ten years after the date you filed the return. (That is when the collection statute expires.)

If you have a carry forward, you need to keep the credits for the duration of the credit.

If you are itemizing your deductions, keep every receipt. Organize them by type and by month. Photocopy them or scan them, because the ink on the receipts fades over time and you may need that information later.

Keep notes about the purpose of the expense.

Keep a daily journal of your business transactions. Bonus points if the receipts and the expense notes correlate with the daily journal.

Keep cancelled checks, bank statements, and credit card statements to go with the receipts.

Stay away from paying cash. It is impossible to reconcile your records when you pay cash.

CHARITABLE CONTRIBUTIONS

When you donate things to thrift stores, they give you a nifty receipt for you to handwrite the items you donated and the value of the donations.

But the form they give you isn't enough. 

Things you need to know:

• The cost or selling price of the item
• Sales of comparable items
• Replacement cost
• Opinions of experts (appraisals)

Just to be safe, use the information found on Form 8283 when keeping records of donations.

• Date of the contribution
• Date acquired by donor 
• How acquired by donor 
• Donor’s cost or adjusted basis 
• Fair market value (see instructions) 
• Method used to determine the fair market value

Places like Goodwill have an online valuation guide for determining the fair market value of donations.