If you're ever audited, a pile of credit-card statements will not satisfy the IRS. Proof you've spent money -- whether it's on office supplies for business or prescription meds for your child -- is important if you want to claim a tax write-off, but it's not sufficient. To sign off on your deductions, the IRS needs more.
By itself, all your statement shows is that you bought something from Staples, Target or Rite-Aid on a particular day. As far as the IRS knows, you could have spent the money on coffee or a magazine rather than anything deductible. If you want a deduction, hang on to the store receipt, which identifies what you purchased. A receipt by itself doesn't prove you spent the money -- you could just have picked it out of the trash -- so hang on to your statement as well.
Among the many types of potential deductions are some with different record-keeping rules. If you donate money to charity, for instance, a credit-card statement is all you need for a deduction of up to $250. When you contribute more than that, you also need a written acknowledgment from the charity. If you drive your car for business, on the other hand, you don't need receipts at all, just a record of how much deductible driving you did.
Once you file your return for this year, keep your receipts and statements for another three years. After that, the statute of limitations blocks the IRS from auditing you, so you don't need the paperwork. If your expenses relate to your assets -- costs of buying or improving your house, for instance -- hang on to them until you sell the assets. Your expenses may affect capital gains tax on the sale, so you need to keep the proof around.
If you scan your receipts and statements into your computer, this is acceptable as long as all the original information is visible and legible. The IRS has accepted scanned receipts since 1997. If you don't have records, however, don't expect the IRS to trust you. If the agency questions any of your deductions, the burden of proof is on you to show that they're legitimate. The IRS has no obligation to take your word for anything.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.