Why documentation matters

The IRS relies on records to confirm whether deductions are legitimate. If the agency reviews your return, clear supporting documents let you respond quickly and often avoid penalties. The IRS generally advises keeping records for at least three years, with longer retention in specific situations (see the IRS guidance linked below) (IRS: “How Long Should I Keep Records?” — https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records).

Essential records every taxpayer should keep

  • Receipts and invoices: Itemized receipts that show date, vendor, amount, and what was purchased. For noncash charitable gifts, keep the charity’s written acknowledgment (see Pub. 526).
  • Bank and credit card statements: Use statements to corroborate payments when original receipts are unavailable.
  • Canceled checks and digital payment records: Proof of payment when a receipt by itself doesn’t show the payee or purpose.
  • Mileage log or odometer readings: For vehicle deductions, record date, business miles, start/end locations and purpose (Pub. 463).
  • Appointment, itineraries, and travel records: For travel and entertainment (where allowed), keep hotel folios, boarding passes, and conference agendas (Pub. 463).
  • Contracts, canceled leases, and invoices: For rent, contractor work, and professional services.
  • Home office documentation: Floor plans, photos, utility bills, and a record allocating business vs. personal use (Pub. 587).
  • Pay stubs and payroll records: For employment tax and wage verification.
  • Tax returns and worksheets: Copies of filed returns and the workpapers used to prepare them.

Retention timelines (IRS-backed guidance)

  • 3 years — The IRS’s typical period to assess a tax return (keep bank records, receipts and filed returns at least this long).
  • 6 years — If you underreport gross income by more than 25%.
  • 7 years — For claims of loss from worthless securities or bad debt.
  • Indefinite — If you do not file a return or if you file a fraudulent return.
  • Asset records — Keep records related to property until the period of limitations expires for the year in which you sell or dispose of the property (see IRS page above).

(These timelines summarize IRS guidance; always confirm for your situation: https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records)

How to document specific common deductions

  • Home office: Keep a diagram or photos showing the space, utility bills, mortgage or rent records, and how you calculated square footage. The IRS’s Publication 587 explains allowable substantiation and methods. See our checklist for home office exams for more detail: Preparing for an IRS Exam of Home Office Deductions: Documentation Checklist.

  • Charitable contributions: Keep donation receipts and written acknowledgments for gifts of $250 or more. For noncash donations, document the condition of items and obtain a qualified appraisal if required; see IRS Pub. 526 and Form 8283 instructions. For more tips on proof and substantiation, see: Documenting Charitable Contributions: Receipts, Substantiation, and IRS Rules.

  • Business expenses (self-employed/Schedule C): Keep invoices, receipts, bank/credit card statements, and a contemporaneous log for mixed-use items. Treat personal and business spending separately and document the business purpose.

  • Medical and miscellaneous deductions: Keep bills, Explanation of Benefits (EOBs), and proof of payment. Only unreimbursed amounts that exceed the applicable AGI floor are deductible; keep clear records of reimbursements.

Organizing records to survive an audit

  • Build a simple folder system: digital folders for each deduction category (home office, vehicle, travel, charity, medical, business expenses).
  • Scan and back up: Store scanned copies in a secure cloud service and keep originals for high-value or contested items.
  • Use dated logs: For mileage or mixed-use assets, contemporaneous logs are far stronger evidence than reconstructed lists.
  • Reconcile quarterly: Match receipts to bank statements and categorize expenses monthly to avoid year-end chaos.

Practical tips from practice

In my experience working with taxpayers, audits are rarely about honest mistakes — they’re about the absence of proof. One small-business client avoided disallowance of a home office deduction because they had a dated floor plan, photos, and a utility-bill history that matched the claimed allocation. When you document purpose (who, what, when, why, and amount) you materially improve the odds of a favorable outcome.

Quick audit-proofing checklist

  • Keep original receipts for major claims and scan everything else.
  • Maintain a contemporaneous mileage log for vehicle deductions.
  • Save written acknowledgments for charitable gifts of $250+.
  • Retain home office photos, floor plans and allocation worksheets.
  • Reconcile receipts to bank/credit card statements quarterly.

Common mistakes to avoid

  • Relying solely on a bank statement without a receipt or description of the expense.
  • Reconstructing expenses years later rather than keeping contemporaneous logs.
  • Mixing personal and business records without clear allocation.

Resources and authoritative references

Professional disclaimer

This article is educational and does not replace personalized tax advice. For questions about your specific situation, consult a qualified tax professional or the IRS.