Here’s what HIVE AI had to say about “What documentation should be kept in case of audit?”:
Documentation to keep in case of audit
Core rule: keep the support for anything on the return
You should keep records (including receipts, canceled checks, bills, and similar documents) that support items of income, deductions, and credits shown on your return, generally until the statute of limitations for that return expires. 2 3
Income records (to prove what you reported)
Keep documents showing income received, such as:
- Forms W-2 and 1099s (including 1099-NEC, 1099-MISC, and (if applicable) 1099-K), plus other pay statements and income records (including records of digital asset/virtual currency transactions, if applicable). 4
Deduction and credit substantiation (to prove what you claimed)
Keep proof of payment and proof of the expense, such as:
- Receipts, canceled checks, invoices, account statements, and credit card receipts/statements. 5
- For travel/vehicle-type deductions, keep “adequate records” (for example an account book, diary/log, and documentary evidence like receipts/canceled checks/bills) that support the required elements of the expense. 1
Tax-return and IRS correspondence files
Keep:
- A copy of the filed return and any related workpapers you used to prepare it.
- IRS letters/notices you receive (and any responses you sent). 4
Property and asset records (basis, depreciation, and gain/loss on sale)
Keep records for property and assets, including documents showing:
- When/how acquired, purchase price, improvements, depreciation/Section 179, and when/how disposed of, selling price, and selling expenses.
- Examples include purchase/sales invoices, real estate closing statements, and proof of payment. 5
Business records (if you have self-employment, rental, or a business)
Keep books and records that clearly show income and expenses, supported by source documents (invoices, bank statements, etc.). 6
Employment/payroll records (if you have employees)
Keep employment tax records for at least 4 years after the tax becomes due or is paid (whichever is later). 3
Health insurance / Marketplace documents (if applicable)
Keep records of health insurance coverage and, if you claim the Premium Tax Credit, information on advance payments and premiums paid. 4
How long to keep them (high-level)
In general, keep records that support items on your return until the applicable limitations period ends (often 3 years after filing, but longer in certain situations such as substantial omission of income, fraud, or no return). 3 2
Sources
1 – IRS – Publication 463 Travel, Gift, and Car Expenses
2 – Topic no. 305, Recordkeeping | Internal Revenue Service
3 – How long should I keep records? | Internal Revenue Service
4 – Good recordkeeping year-round helps taxpayers avoid tax time frustration | Internal Revenue Service
5 – What kind of records should I keep | Internal Revenue Service
6 – Recordkeeping | Internal Revenue Service
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