| Pub. 552, Recordkeeping for Individuals |
2004 Tax Year |
Main Contents
This is archived information that pertains only to the 2004 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
There are many reasons to keep records. In addition to tax
purposes, you may need to keep records for insurance purposes or for
getting a loan. Good records will help you:
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Identify sources of income. You may receive money
or property from a variety of sources. Your records can identify the
sources of your income. You need this information to separate business
from nonbusiness income and taxable from nontaxable income.
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Keep track of expenses. You may forget an expense
unless you record it when it occurs. You can use your records to
identify expenses for which you can claim a deduction. This will help
you determine if you can itemize deductions on your tax return.
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Keep track of the basis of property. You need to
keep records that show the basis of your property. This includes the
original cost or other basis of the property and any improvements you
made.
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Prepare tax returns. You need records to prepare
your tax return. Good records help you to file quickly and
accurately.
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Support items reported on tax returns. You must
keep records in case the IRS has a question about an item on your
return. If the IRS examines your tax return, you may be asked to
explain the items reported. Good records will help you explain any
item and arrive at the correct tax with a minimum of effort. If you do
not have records, you may have to spend time getting statements and
receipts from various sources. If you cannot produce the correct
documents, you may have to pay additional tax and be subject to
penalties.
The IRS does not require you to keep your records in a particular
way. Keep them in a manner that allows you and the IRS to determine
your correct tax.
You can use your checkbook to keep a record of your income and
expenses. In your checkbook you should record amounts, sources of
deposits, and types of expenses. You also need to keep documents, such
as receipts and sales slips, that can help prove a deduction.
You should keep your records in an orderly fashion and in a safe
place. Keep them by year and type of income or expense. One method is
to keep all records related to a particular item in a designated
envelope.
In this section you will find guidance about basic records that
everyone should keep. The section also provides guidance about
specific records you should keep for certain items.
Computerized records.
Many retail stores sell computer software packages that you can use
for recordkeeping. These packages are relatively easy to use and
require little knowledge of bookkeeping and accounting.
If you use a computerized system, you must be able to produce
legible records of the information needed to determine your correct
tax liability. In addition to your computerized records, you must keep
proof of payment, receipts, and other documents to prove the amounts
shown on your tax return.
Copies of tax returns.
You should keep copies of your tax returns as part of your tax
records. They can help you prepare future tax returns, and you will
need them if you file an amended return. Copies of your returns and
other records can be helpful to your survivor or the executor or
administrator of your estate.
If necessary, you can request a copy of a return and all
attachments (including Form W–2) from the IRS by using Form
4506, Request for Copy or Transcript of Tax Form. For
information on the cost and where to file, see the Form 4506
instructions.
Basic records are documents that everybody should keep. These are
the records that prove your income and expenses. If you own a home or
investments, your basic records should contain documents related to
those items. This table lists documents you should keep as basic
records. Following the table are examples of information you can get
from these records.
Income.
Your basic records prove the amounts you report as income on your
tax return. Your income may include wages, dividends, interest, and
partnership or S corporation distributions. Your records also can
prove that certain amounts are not taxable, such as tax-exempt
interest.
Note.
Keep Copy C of Form W-2 for at least 3 years after the due date for
filing your tax return. However, to help protect your social security
benefits, keep Copy C until you begin receiving social security
benefits, just in case there is a question about your work record or
earnings in a particular year.
Expenses.
Your basic records prove the expenses for which you claim a
deduction (or credit) on your tax return. Your deductions may include
alimony, charitable contributions, mortgage interest, and real estate
taxes. You may also have child care expenses for which you can claim a
credit.
Home.
Your basic records should enable you to determine the basis or
adjusted basis of your home. You need this information to determine if
you have a gain or loss when you sell your home or to figure
depreciation if you use part of your home for business purposes or for
rent. Your records should show the purchase price, settlement or
closing costs, and the cost of any improvements. They may also show
any casualty losses deducted, insurance reimbursements for casualty
losses, and postponed gain from the sale of a previously-owned home.
For information on which settlement or closing costs are included
in the basis of your home, see Publication 530, Tax Information
for First-Time Homeowners. For information on basis, including
the basis of property you receive other than by purchase, see
Publication 551, Basis of Assets.
When you sell your home, your records should show the sales price
and any selling expenses, such as commissions. For information on
selling your home, see Publication 523, Selling Your Home.
Investments.
Your basic records should enable you to determine your basis in an
investment and whether you have a gain or loss when you sell it.
Investments include stocks, bonds, and mutual funds. Your records
should show the purchase price, sales price, and commissions. They may
also show any reinvested dividends, stock splits and dividends, load
charges, and original issue discount (OID).
For information on stocks and bonds, see Publication 550,
Investment Income and Expenses. For information on mutual
funds, see Publication 564, Mutual Fund Distributions.
One of your basic records is proof of payment. You should keep
these records to support certain amounts shown on your tax return.
Proof of payment alone is not proof that the item claimed on your
return is allowable. You should also keep other documents that will
help prove that the item is allowable.
Generally, you prove payment with a canceled check or cash receipt.
If you do not have a canceled check because your bank does not return
canceled checks or if you make payments by credit card or electronic
funds transfer, you may be able to prove payment with an account
statement.
If you make payments in cash, you should get a dated and signed
receipt showing the amount and the reason for the payment.
Account statements.
You may be able to prove payment with a legible financial account
statement prepared by your bank or other financial institution. These
statements are accepted as proof of payment if they show the items in
the following table.
Pay statements.
If you have deductible expenses withheld from your paycheck, such
as union dues or medical insurance premiums, keep your pay statements
as proof of payment of these expenses.
This section is an alphabetical list of some items that require
specific records in addition to your basic records.
If you receive or pay alimony, you should keep a copy of your
written separation agreement or the divorce, separate maintenance, or
support decree. If you pay alimony, you will also need to know your
former spouse's social security number. For information on alimony,
see Publication 504, Divorced or Separated Individuals.
Business Use of Your Home
You may be able to deduct certain expenses connected with the
business use of your home. You should keep records that show the part
of your home that you use for business and the expenses related to
that use. For information on how to allocate expenses between business
and personal use, see Publication 587, Business Use of Your Home.
Casualty and Theft Losses
To deduct a casualty or theft loss, you must be able to prove that
you had a casualty or theft. Your records also must be able to support
the amount you claim.
For a casualty loss, your records should show:
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The type of casualty (car accident, fire, storm, etc.) and
when it occurred.
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That the loss was a direct result of the casualty.
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That you were the owner of the property.
For a theft loss, your records should show:
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When you discovered your property was missing,
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That your property was stolen, and
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That you were the owner of the property.
For more information, see Publication 547, Casualties,
Disasters, and Thefts (Business and Nonbusiness). For a workbook
designed to help you figure your loss, see Publication 584,
Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property).
You must give the name, address, and taxpayer identification number
for all persons or organizations that provide care for your child or
dependent. You can use Form W-10 or various other sources to get the
information from the care provider. Keep this information with your
tax records. For information on the credit, see Publication 503,
Child and Dependent Care Expenses.
The kinds of records you must keep for charitable contributions
depend on the amount of the contribution and whether the contribution
is in cash. For information on contributions, see Publication 526,
Charitable Contributions.
Contributions from which you benefit.
Generally, if you make a charitable contribution that is more than
$75 and is partly for goods or services, the organization must give
you a written statement that you should keep.
Cash.
Cash contributions include those paid by cash, check, credit card,
or payroll deduction. For each cash contribution, you must keep one of
the following:
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A canceled check or a financial account statement,
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A receipt from the organization showing the name of the
organization, the amount, and date of the contribution, or
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Other reliable written records that are reasonable under the
circumstances and that include the name of the organization, the
amount, and the date of the contribution.
Contributions of $250 or more.
You can deduct a contribution of $250 or more only if you have a
written acknowledgment of your contribution from the organization.
Out-of-pocket expenses.
You should keep records of your out-of-pocket expenses when you
perform services for a charitable organization. You can record these
expenses in a diary. For example, if you use your car when doing
volunteer work, you should record the name of the organization and the
unreimbursed gas and oil expenses directly related to the volunteer
work. If you do not want to keep records of your actual expenses, you
can keep a log of the miles you drove your car for the charitable
purpose and use the standard mileage rate shown in Publication 526.
You should also keep records of any parking fees, tolls, taxi fares,
and bus fares.
For each contribution of property, you must keep a receipt from the
organization showing:
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The name of the organization,
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The date and location of the contribution, and
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A reasonably detailed description of the property.
A letter or other written communication from the organization
containing the above information will serve as a receipt.
You also must keep reliable written records for each item of
donated property. These records must include the:
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Fair market value of the property at the time of the
contribution,
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Cost or other basis of the property, and
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Terms of any conditions attached to the contribution.
For more information on donated property, see Publication 526.
Credit for the Elderly or the Disabled
If you are under age 65, you must have your physician complete a
statement certifying that you were permanently and totally disabled on
the date you retired.
You do not have to file this statement with your Form 1040 or Form
1040A, but you must keep it for your records.
Veterans.
If the Department of Veterans Affairs (VA) certifies that you are
permanently and totally disabled, you can substitute VA Form
21–0172, Certification of Permanent and Total Disability,
for the physician's statement you are required to keep. See
Publication 524, Credit for the Elderly or the Disabled,
for more information.
Employee Business Expenses
If you have employee business expenses, see Publication 463,
Travel, Entertainment, Gift, and Car Expenses, for a
discussion of what records to keep.
Gambling Winnings and Losses
You must keep an accurate diary of your winnings and losses that
includes the:
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Date and type of gambling activity,
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Name and address or location of the gambling establishment,
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Names of other persons present with you at the gambling
establishment, and
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Amount you won or lost.
In addition to your diary, you should keep other documents. See the
discussion related to gambling losses in Publication 529,
Miscellaneous Deductions, for documents you should keep.
Individual Retirement Arrangements (IRAs)
Keep copies of the following forms and records until all
distributions are made from your IRA(s).
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Form 5498 or similar statement received for each year
showing contributions you made, distributions you received, and the
value of your IRA(s),
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Form 1099–R received for each year you received a
distribution, and
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Form 8606 for each year you made a nondeductible
contribution to your IRA or received distributions from an IRA if you
ever made nondeductible contributions.
For a worksheet you can use to keep a record of yearly
contributions and distributions, see Publication 590, Individual
Retirement Arrangements (IRAs) (Including Roth IRAs and Education
IRAs).
Medical and Dental Expenses
In addition to records you keep of regular medical expenses, you
should keep records on transportation expenses that are primarily for
and essential to medical care. You can record these expenses in a
diary. You should record gas and oil expenses directly related to that
transportation. If you do not want to keep records of your actual
expenses, you can keep a log of the miles you drive your car for
medical purposes and use the standard mileage rate. You should also
keep records of any parking fees, tolls, taxi fares, and bus fares.
For information on medical expenses and the standard mileage rate,
see Publication 502, Medical and Dental Expenses.
For each qualified medical expense you deduct or pay with a
distribution from your medical savings account, you must keep a record
of the name and address of each person you paid and the amount and
date of the payment. For more information on medical savings accounts,
see Publication 969, Medical Savings Accounts (MSAs).
If you paid mortgage interest of $600 or more, you should receive
Form 1098, Mortgage Interest Statement. Keep this form and
your mortgage statement and loan information in your records. For
information on mortgage interest, see Publication 936, Home
Mortgage Interest Deduction.
Use the worksheet in your tax return instructions to figure the
taxable part of your pension or annuity. Keep a copy of the completed
worksheet until you fully recover your contributions. For information
on pensions and annuities, see Publication 575, Pension and
Annuity Income, or Publication 721, Tax Guide to U.S. Civil
Service Retirement Benefits.
Your Form W–2 shows the state income tax withheld from your
wages. If you made estimated state income tax payments, you need to
keep a copy of the form. You also need to keep copies of your state
income tax returns. If you received a refund of state income taxes,
the state may send you Form 1099–G, Certain Government and
Qualified State Tuition Program Payments.
Keep mortgage statements, tax assessments, or other documents as
records of the real estate and personal property taxes you paid.
You must keep a daily record to accurately report your tips on your
return. You can use Form 4070A, Employee's Daily Record of Tips,
which is found in Publication 1244, Employee's Daily Record
of Tips and Report to Employer, to record your tips. For
information on tips, see Publication 531, Reporting Tip Income.
You must keep your records as long as they may be needed for the
administration of any provision of the Internal Revenue Code.
Generally, this means you must keep records that support items shown
on your return until the period of limitations for that return runs
out.
The period of limitations is the period of time in which you can
amend your return to claim a credit or refund or the IRS can assess
additional tax. The following table contains the periods of
limitations that apply to income tax returns. Unless otherwise stated,
the years refer to the period beginning after the return was filed.
Returns filed before the due date are treated as being filed on the
due date.
Property.
Keep records relating to property until the period of limitations
expires for the year in which you dispose of the property in a taxable
disposition. You must keep these records to figure your basis for
computing gain or loss when you sell or otherwise dispose of the
property.
Generally, if you received property in a nontaxable exchange, your
basis in that property is the same as the basis of the property you
gave up. You must keep the records on the old property, as well as the
new property, until the period of limitations expires for the year in
which you dispose of the new property in a taxable disposition.
Keeping records for nontax purposes.
When your records are no longer needed for tax purposes, do not
disgard them until you check to see if they should be kept longer for
other purposes. Your insurance company or creditors may require you to
keep certain records longer than the IRS does.
How To Get More Information
You can order free publications and forms, ask tax questions, and
get more information from the IRS in several ways. By selecting the
method that is best for you, you will have quick and easy access to
tax help.
Free tax services.
To find out what services are available, get Publication 910,
Guide to Free Tax Services. It contains a list of free tax
publications and an index of tax topics. It also describes other free
tax information services, including tax education and assistance
programs and a list of TeleTax topics.
Personal computer. With your personal computer and
modem, you can access the IRS on the Internet at
www.irs.gov. While visiting our web site, you can select:
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Frequently Asked Tax Questions (located under
Taxpayer Help & Ed) to find answers to questions you
may have.
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Forms & Pubs to download forms and
publications or search for forms and publications by topic or
keyword.
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Fill-in Forms (located under Forms &
Pubs) to enter information while the form is displayed and then
print the completed form.
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Tax Info For You to view Internal Revenue
Bulletins published in the last few years.
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Tax Regs in English to search regulations and the
Internal Revenue Code (under United States Code
(USC)).
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Digital Dispatch and IRS Local News Net
(both located under Tax Info For Business) to receive
our electronic newsletters on hot tax issues and news.
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Small Business Corner (located under Tax
Info For Business) to get information on starting and operating
a small business.
You can also reach us with your computer using File Transfer
Protocol at ftp.irs.gov.
TaxFax Service. Using the phone attached to your fax
machine, you can receive forms and instructions by calling
703–368–9694. Follow the directions from the
prompts. When you order forms, enter the catalog number for the form
you need. The items you request will be faxed to you.
Phone. Many services are available by phone.
-
Ordering forms, instructions, and publications.
Call 1–800–829–3676 to order
current and prior year forms, instructions, and publications.
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Asking tax questions. Call the IRS with your tax
questions at 1–800–829–1040.
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TTY/TDD equipment. If you have access to TTY/TDD
equipment, call 1–800–829–4059 to ask tax
questions or to order forms and publications.
-
TeleTax topics. Call
1–800–829–4477 to listen to pre-recorded
messages covering various tax topics.
Evaluating the quality of our telephone services. To
ensure that IRS representatives give accurate, courteous, and
professional answers, we evaluate the quality of our telephone
services in several ways.
-
A second IRS representative sometimes monitors live
telephone calls. That person only evaluates the IRS assistor and does
not keep a record of any taxpayer's name or tax identification
number.
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We sometimes record telephone calls to evaluate IRS
assistors objectively. We hold these recordings no longer than one
week and use them only to measure the quality of assistance.
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We value our customers' opinions. Throughout this year, we
will be surveying our customers for their opinions on our
service.
Walk-in. You can walk in to many post offices,
libraries, and IRS offices to pick up certain forms, instructions, and
publications. Also, some libraries and IRS offices have:
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An extensive collection of products available to print from
a CD-ROM or photocopy from reproducible proofs.
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The Internal Revenue Code, regulations, Internal Revenue
Bulletins, and Cumulative Bulletins available for research
purposes.
Mail. You can send your order for forms, instructions,
and publications to the Distribution Center nearest to you and receive
a response within 10 workdays after your request is received. Find the
address that applies to your part of the country.
-
Western part of U.S.:
Western Area Distribution Center
Rancho Cordova, CA 95743–0001
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Central part of U.S.:
Central Area Distribution Center
P.O. Box 8903
Bloomington, IL 61702–8903
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Eastern part of U.S. and foreign addresses:
Eastern Area Distribution Center
P.O. Box 85074
Richmond, VA 23261–5074
CD-ROM. You can order IRS Publication 1796, Federal
Tax Products on CD-ROM, and obtain:
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Current tax forms, instructions, and publications.
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Prior-year tax forms, instructions, and publications.
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Popular tax forms which may be filled in electronically,
printed out for submission, and saved for recordkeeping.
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Internal Revenue Bulletins.
The CD-ROM can be purchased from National Technical Information
Service (NTIS) by calling 1–877–233–6767
or on the Internet at www.irs.gov/cdorders. The
first release is available in mid-December and the final release is
available in late January.
IRS Publication 3207, Small Business Resource Guide, is
an interactive CD-ROM that contains information important to small
businesses. It is available in mid-February. You can get one free copy
by calling 1–800–829–3676.
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