Overview

An IRS income tax audit examines the accuracy of one or more tax returns and the supporting records you used to prepare them. The IRS may request documentation by mail (a correspondence audit), invite you to an audit office (a mail/office audit), or visit your place of business or home (a field audit). Preparing a clear, complete packet of documents reduces back-and-forth with the agent and often shortens the review. (IRS, Audit Process: https://www.irs.gov/businesses/small-businesses-self-employed/audits)

This guide explains the specific documents to gather for common audit triggers, how to organize them, and practical tips I use with clients to present a defensible audit packet.

How long to keep records (brief)

For most individual tax records, keep tax returns and supporting paperwork at least three years from the date you filed (or two years from the date you paid the tax) — but keep records for six years if you omitted more than 25% of gross income. There’s no statute of limitations for fraud or if you fail to file. For details, see the IRS recordkeeping guidance (https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping).

Core documents every taxpayer should provide

  • Signed copies of the tax returns under audit (Form 1040, schedules, Forms 1120/1065/1120S if applicable). Include the electronic filing acknowledgements if available.
  • W-2 forms for wage income and Form W-2G for certain gambling winnings.
  • All 1099 series forms (1099-NEC, 1099-MISC, 1099-INT, 1099-DIV, 1099-B, 1099-R, etc.).
  • Bank account statements (checking and savings) covering the audit period.
  • Investment account statements and year-end summaries, including brokerage trade confirmations and Form 1099-B.
  • Cancelled checks, credit card statements, or bank debit records that substantiate payments.

Keep electronic copies and searchable PDFs when possible; searchable files speed the auditor’s review if you can provide them.

Deductions, credits, and expense support (individuals)

  • Charitable contributions: donation receipts, acknowledgement letters for gifts over $250, cancelled checks, and receipts for noncash donations plus Form 8283 if required.
  • Medical expenses: explanations of benefits (EOBs), receipts, prescription records, invoices, and mileage logs for medical travel.
  • Mortgage interest and real estate tax: Form 1098 mortgage interest statements, settlement statements (HUD-1/Closing Disclosure), and property tax bills.
  • Education credits/deductions: Form 1098-T tuition statements, receipts, and loan interest statements (Form 1098-E).
  • Child care credits: provider statements with EIN or SSN, amounts paid, and receipts.

Self-employed and small business documents

If you are self-employed or run a small business, audits often focus on Schedule C, losses, and home-office or vehicle deductions. Gather:

  • Profit-and-loss statements and the general ledger for the year.
  • Sales invoices and receipts, bank deposits, and merchant processor statements (e.g., Stripe, Square).
  • Business bank and credit card statements reconciled to the ledger.
  • Receipts and invoices for deductible expenses (advertising, supplies, software, repairs, professional fees).
  • Payroll records, Forms W-2/W-3, Forms 941 and 940, and state payroll filings.
  • Mileage logs for business use of a vehicle or a contemporaneous mileage tracking app with trip purpose, miles, and dates.
  • Inventory records and cost sheets, purchase invoices, and inventory count reports.
  • Depreciation schedules, asset purchase invoices, and Form 4562.

For a tailored checklist for small businesses, see FinHelp’s Small Business Audit Preparation Checklist.

(Internal link: Small Business Audit Preparation Checklist: https://finhelp.io/glossary/small-business-audit-preparation-checklist/)

Partnership, S-corp, and corporate audits

  • K-1s for partners/shareholders and underlying partnership/corporate financial statements.
  • Corporate minutes and records that show owner distributions, loans, and resolutions.
  • Inter-company agreements and documentation supporting related-party transactions.

Real estate, rental, and investment-specific records

  • Lease agreements, rental income logs, tenant security deposit records, and receipts for repairs and maintenance.
  • Closing statements and Form 1099-S for property sales, basis records, and improvements documentation.
  • Cost basis calculations for stock sales, including original purchase confirmations and reinvestment records.

How to assemble an audit packet (practical steps)

  1. Start with a cover letter: identify the taxpayer (name, SSN or EIN partially masked), the tax year(s), and a short contents list.
  2. Include a copy of the audit notice and a copy of the filed tax return(s) as the first items.
  3. Group documents by issue (income, deductions, credits) and label tabs or folders accordingly.
  4. Create an indexed table of contents with page numbers and a short description of each document.
  5. Highlight or annotate documents where figures on the return are directly supported (for example, show where a Schedule C expense amount appears on a receipt or ledger).
  6. Keep originals but provide clearly labeled copies unless the IRS explicitly requests originals.

Templates and a deeper packet checklist are available in our guidance on preparing an audit packet for an IRS auditor.

(Internal link: Preparing an Audit Packet: What to Send to an IRS Auditor: https://finhelp.io/glossary/preparing-an-audit-packet-what-to-send-to-an-irs-auditor/)

Communication tips during the audit

  • Respond on time: IRS notices include deadlines. Missing a deadline can lead to default adjustments.
  • Use a single point of contact within your organization or your practitioner to maintain consistent communication.
  • Avoid volunteering extra information beyond what the IRS requested. Provide the documents requested with concise explanations.
  • If you disagree with an adjustment, you can appeal; see our resource on using the IRS appeals process for next steps.

(Internal link: How to Use the IRS Appeals Process to Resolve Audit Disputes: https://finhelp.io/glossary/how-to-use-the-irs-appeals-process-to-resolve-audit-disputes/)

Common audit red flags and the documents that address them

  • Large, unusual deductions (charitable, business meals, travel): provide receipts, contemporaneous logs, and business purpose explanations.
  • Unreported income (1099 mismatch): bank deposits and 1099s, and third-party platform statements (e.g., gig platforms).
  • Home-office deduction: square footage calculations, home expense bills (utilities, insurance), and a floor plan showing exclusive business use.

Practical tips from practice

In my work with clients, a consistent approach that reduces audit friction is to maintain a simple audit folder throughout the year. Put every receipt related to taxes into that folder, reconcile it monthly to your accounting records, and create an annual audit binder when you file. When the IRS requested records for a client’s 2019 Schedule C expenses, having a reconciled ledger and a mileage log reduced the auditor’s follow-ups and produced a favorable outcome.

Electronic organization tools (cloud storage, accounting software, and PDF OCR) make searches inside documents fast — save the auditor time and your stress.

What to avoid and scams to watch for

  • Don’t send original identification documents (social security cards, birth certificates) unless the IRS specifically asks for them and only via secure channels.
  • Beware of phone or email scammers claiming to be the IRS. The IRS will initiate contact by mail for audits; verify a notice by calling the number on the IRS website and not a phone number given in a suspicious message. (IRS Tax Scams/Consumer Alerts)

Final checklist — quick view

  • Copies of filed tax returns
  • W-2s and all 1099s
  • Bank, credit card, and investment statements
  • Receipts and invoices supporting deductions
  • Mileage logs and schedules for home-office
  • Payroll records and payroll tax filings (if you have employees)
  • Depreciation schedules and asset invoices
  • Correspondence with the IRS and proof of payments

Disclaimer

This article is educational and does not substitute for personalized tax advice. For complex audits, representation by a CPA, enrolled agent, or tax attorney can materially change outcomes; consult a qualified tax professional for specific guidance. Authoritative IRS guidance referenced above: IRS audits page and IRS recordkeeping guidance.

Authoritative sources

If you’d like, I can convert this checklist into a fillable audit-packet template or a printer-friendly PDF tailored to individual or business filings.