You should keep records to substantiate the income and expenses you report on your tax return, documents that support the basis of your home and other assets, and records related to your investments.
Income
You should basically keep everything that involves income. As a general rule, all income that you receive, in the form of money, goods or services, is taxable unless it is specifically exempt. And you will determine what income is exempt when you do your taxes. The following are examples of the documentation you should keep:
Employees:
Work contract or offer letter
Paycheck stubs or pay statements
Tips – You must keep a daily record of tips in order to report them to your employer to have social security, Medicare, and federal income tax withheld. You will also need this record to report your actual tip income on your tax return. If you don’t have another record, You can use IRS Form 4070A, Employee’s Daily Record of Tips
Documentation of awards, bonuses, stock options, and other incentives
W-2 – Wage and Tax Statement
Unemployment compensation statements and Form 1099-G
Self-employed and business owners:
Sales orders or tickets
Invoices
Billing statements
Fee billings
Cash register receipts
Credit card statements
Electronic funds transmittals
Bank statements
Other receipts
Others:
Bank statements (for deposits)
Brokerage statements
Receipts for rent and royalty income
Purchase and sale agreements
Social security benefits
Receipts of alimony – You should keep a copy of your divorce decree, written separation agreement, separate maintenance or support decree
Diary of gambling winnings and losses
W-2G – Certain Gambling Winnings
1099 Forms for interest, dividends, capital gain distribution, and other types of income
Form 1099-R - Distribution From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., if you received a distribution.
K-1 Forms (for partnerships)
Worksheets for determining taxable portion of pensions, annuities, and social security benefits