Most people will never face a tax audit, but that doesn’t mean it can’t happen. The IRS audits a small percentage of returns every year. This is often based on red flags like mismatched records or unusually high deductions. Even if everything was filed correctly, a missing document or unclear expense can cause delays or headaches if you’re not prepared.
Keeping clear, organized records is the best way to protect yourself. Whether you’re filing a simple return or reporting income from multiple sources, having your paperwork in order helps you respond quickly and confidently if questions ever arise.
Start with the Basics for Smart Record Keeping
You don’t need to keep every receipt, but you do need a clear trail for the numbers on your return. Use this simplified checklist to stay audit-ready year-round.
- Your Tax Return & Worksheets: Keep a signed copy of your return, plus any worksheets or calculations that support it.
- Income Documents: Hang on to your W-2s, 1099s (all types), K-1s, and any other forms showing income from jobs, contracts, investments, or businesses.
- Proof of Deductions: Save receipts, credit card statements, or digital payment records for anything you deducted—especially large items like mortgage interest (Form 1098), charitable donations, child care, or educational expenses.
- Bank & Investment Statements: Keep monthly or annual statements from your bank and brokerage accounts to support income and expense entries.
- Major Life Events: If you bought or sold a home, inherited valuable property, or made large donations, hold on to those closing statements, appraisals, and documents showing fair market value.
- Business-Related Records: If you’re self-employed or claim business deductions, store mileage logs, meal and cell phone documentation, and any receipts related to your business expenses.
- Health & Insurance Forms: Keep your Form 1095s to show proof of health insurance, especially in years when coverage may be in question.
Being proactive with your record-keeping helps give you peace of mind that if an audit situation does ever come your way that you’ll be prepared. A little effort now can save you a bunch of trouble down the road!
When and What You Can Toss
It’s tempting to clear out what seems like clutter, but tossing tax documents too soon can cost you. The general rule is to keep federal tax records for at least three years after the filing deadline or the date you filed—whichever is later. But there are exceptions.
If you understated your income by more than 25%, the IRS has up to six years to audit your return. What’s more, some states have longer record retention rules than the IRS—so always double-check your state requirements before getting rid of them.
You’ll also want to keep records for any assets you still own. This can include both property and investments. Wait until three years after you sell or dispose of them to toss those records. That includes purchase documents, improvement receipts, and sales paperwork.
Basically, when in doubt, keep it. Digital storage makes it easier than ever to hold on to key documents without taking up physical space. Take advantage of those benefits and stay in the clear every year.
Need Help Getting Organized?
If you’re not sure what to keep—or what’s already missing—reach out to our team. We’ll help you review the specifics so you can create a system that keeps your records clear, complete, and audit-ready. We’re available year-round to assist both new and existing clients. Contact us today to get organized!
Frequently Asked Questions
Our clients appreciate our fair, transparent pricing — no surprise fees, no confusing invoices. Individual tax returns start at $750, and business returns start at $1,500. If you’d like to talk through your specific situation before committing, a one-hour consultation with a CPA and tax preparer is $250.
Every client’s needs are different, so these starting rates can vary based on the complexity of your return or the scope of services you need. Visit our pricing page for more detail.
If you need accounting, bookkeeping, or tax services, contact us today — we’d love to learn more about your situation and provide pricing tailored to your needs.
We work with a wide variety of individual and business clients across central Indiana. Our clients range from entrepreneurs and small business owners to business professionals, retired individuals, families, and business corporations of all sizes.
Whether you’re just starting a business, managing personal and family finances, planning for retirement, or running an established company, we tailor our accounting, tax, and advisory services to fit where you are and where you’re headed. No two clients are exactly alike, and neither is our approach — we take the time to understand your specific situation so we can offer advice that actually applies to you.
NSO and Company is located in Fishers, Indiana, just off I-69 near the intersection of Lantern Road and 96th Street — an easy, convenient drive from anywhere in the Indianapolis area. Our office is at 8950 Fitness Lane, Suite 100, Fishers, IN 46037.
We’re open Monday through Friday, 8 am – 4 pm, and welcome walk-ins as well as scheduled appointments. If you’d like to speak with someone directly, call us at 317-588-3131.
NSO and Company combines years of experience with personalized service to help individuals and businesses prepare their taxes accurately and on time. We take the time to understand your situation, answer your questions, and look for opportunities to help you maximize your tax savings, while staying compliant and making the process as smooth as possible. Our clients also value our fair pricing and the confidence that comes from working with a trusted local firm.
