Importance of recordkeeping and documentation

It is very important to keep accurate records and documentations from all income and expense related to your tax returns for individuals and small businesses.

The following are the common areas where individual taxpayers should be aware of:
1. receipts
2. mileage logs
3. credit card and bank statements
4. broker statements
5. home purchase.improvement records
6. home rental records
7. other records that will support your deductions/credits

The following are common areas where small business taxpayers should be aware of:
1. employment/payroll tax records
2. supporting documentations related to expenses
3. supporting documentations related to income
4. bank statements, credit card statements, cash register, canceled checks, etc.

It is always good to have more than enough documentation. When your return gets selected for further questioning, having proper recordkeeping and documentation may avoid headaches when you can provide the items in question.



source: http://www.irs.gov/newsroom/article/0,,id=172250,00.html