The Essential Guide to Record-Keeping for Every Taxpayer

When I work with clients, one of the first things I ask about is their records. Not because I love paperwork (I don’t), but because good record-keeping is the backbone of a strong tax position. It’s what allows me to defend your return, claim every deduction you’re entitled to, and keep IRS stress out of the picture.

Different taxpayers face different requirements. What matters most is knowing which records are critical for your situation and how long you should keep them.

W-2 Employees

If you’re earning a paycheck, accuracy is everything. Your W-2 reports your income, but receipts for medical expenses or charitable donations can turn into valuable deductions. And copies of your past three years’ returns and supporting documents give you a safety net if questions come up later.

Retirees

Retirement often means multiple income sources: pensions, annuities, Social Security, and investment distributions. Each comes with its own Form 1099 or statement. The taxability of some pensions and annuities can be affected by what is paid in. Be sure to supply that amount, the date draws started, and dates of birth for both the taxpayer and the spouse. Add in records for IRA or 401(k) activity and any medical expenses you plan to deduct, and you’ll have a clear picture of your income and deductions. I always recommend keeping at least three years of returns and supporting documents to stay protected.

Business Owners (Schedule C)

Running a business comes with more paperwork and more scrutiny, and it is the taxpayer's responsibility to prove to the IRS what their income and deductions are. Income records like invoices, deposits, and receipts show what came in. Credit card statements, expense receipts, and bank records prove what went out. If you use a vehicle for business, a mileage log is essential. And if you employ staff, employment tax records are non-negotiable. I advise keeping all documents tied to your return for at least three years.

Investors

Investing creates opportunity—and paperwork. 1099s report dividends, interest, and sales. Trade confirmations and broker statements track your transactions. Most importantly, cost basis records (purchase dates and amounts) ensure you’re taxed only on your actual gains. Too many times, I have seen individuals sell investments and do not know the basis of their stock. Missing this detail often means paying more than you should. Receiving assets in different ways can affect the basis of the stock. When in doubt, ask, and sooner rather than later.

Real Estate Investors

Buying, selling, or renting property requires meticulous documentation. Closing statements and deeds establish ownership and cost. Rental agreements, income records, and expense receipts support your reported income and deductions. Depreciation schedules add another layer of proof that the IRS expects to see. I tell clients to hold income and expense documents for at least three years after filing; but to retain agreements, major purchases and repairs, casualty loss information, and insurance claims until the property is disposed of.

Rental Property Owners

If you’re holding rental property, consistency is key. Lease agreements document your tenants. Income records and expense receipts prove what you earned and spent. Maintenance logs back up repair and upkeep claims. Depreciation schedules round out the file. Together, these create the foundation for your rental reporting. Following the same retention period as real estate investors.

Partners and Shareholders

For partnerships and S corporations, the K-1 is central. It reports your share of income, deductions, and credits. Along with K-1s, keep records of your contributions and distributions, plus copies of the entity’s return. Without them, your personal return lacks the documentation it needs.

Wrapping It Up

Over the years, I’ve seen what happens when records are missing: deductions lost, taxes overpaid, audits that drag on longer than they should. I’ve also seen the peace of mind that comes when everything is in order.

That’s where the right partner makes all the difference. With the right CPA, your records stop being a pile of paper and become a plan you can trust. If you’d rather not manage it all on your own, I can help make sure nothing slips through the cracks. Let’s talk.

About Dark Horse CPAs

Dark Horse CPAs provides an integrated suite of services including tax, accounting, fractional CFO, and wealth management to small businesses and individuals across the U.S. The firm was established to transform the client experience by offering personalized, high-quality services that small businesses and individuals deserve. As Dark Horses in their industries, these businesses benefit from advanced tax strategies and accounting insights typically reserved for larger companies. With a nationwide presence and a team of dedicated professionals, Dark Horse CPAs is committed to your success. Get a quote today.