Keep in mind that items such as interest deductions, unreimbursed business expenses and charitable contributions may require extensive records to support them on your federal tax return. Individuals with incomplete records would find it difficult to answer Internal Revenue Service inquiries. In summary, organized recordkeeping will enable you to confidently handle tax or other matters arising from financial transactions. It is important to remember that recordkeeping systems are as unique and different as the people using them. For most individuals, an essential ingredient and good way to begin is by setting up a checking account.
Many consumers find that a canceled check serves as effective support in a dispute.
For major purchases, disputed transactions and checks related to legal matters, checks should be saved indefinitely. Some banks don't provide customers with canceled checks, but do keep other records to document the checks drawn against the account. In any case, a properly maintained checking account should record all your income and expenses. When designing your recordkeeping system, always remember simplicity and consistency. Avoid a system that is too intricate to remember easily.