Storing Documents and Computer Files

Consider creating separate file folders for documents you need to keep long-term, such as home purchase and improvement documents, Federal and State taxes, and business records. You should regularly back up your electronic documents by copying them to a CD, DVD or hard disk drive. You may also print out this information quarterly or annually. Critical information should be stored in a secure location, outside your home or business, or in a fire safe.

Maintaining Logs and Records

Expenses such as automobile deductions and travel and entertainment expenses are likely to require that you keep logs showing usage and expenses. For automobile usage, you should track mileage, trip dates and locations, and the business purpose of the trip.

Maintaining Receipts

Original receipts are always best, to verify the purchase of an item you wish to include on your tax forms. You may also wish to keep cancelled checks, credit card slips, as well as credit card statements for additional reference. These may prove useful if you have lost your original receipt. Do not falsify or forge any documents.

Document Retention

To be safe, keep Federal and State tax returns for seven years. You can be audited up to three years after your taxes are due, so keep all records a minimum of three years. Records that support business assets need to be kept for a minimum of three years after an asset is fully depreciated.

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