Amanda Gray is a freelance woodworker, illustrator, and writer who covers various topics, from coworking to travel. She is passionate about language, literature, and furniture making. An early adopter of remote work, much of her professional life had been centered around elevating and supporting freelance professionals in the creative fields.
August 2, 2024 May 21, 2024 Reviewed by Isaiah McCoy, CPA
Isaiah McCoy is a Certified Public Accountant (CPA) in Miami, Florida with over a decade of experience in tax, accounting, and financial analysis. He holds a Bachelor of Science degree in accountancy and a Master of Taxation degree from Arizona State University. Isaiah has also earned a Master of Business Administration with a finance concentration from LSU Shreveport. Isaiah has worked within several industries, including public accounting (serving clients in the natural resources, real estate, and not-for-profit sectors), higher education, and healthcare. In his free time, he enjoys traveling and watching soccer and is fluent in Spanish.
Amanda Gray is a freelance woodworker, illustrator, and writer who covers various topics, from coworking to travel. She is passionate about language, literature, and furniture making. An early adopter of remote work, much of her professional life had been centered around elevating and supporting freelance professionals in the creative fields.
August 2, 2024 May 21, 2024 Reviewed by Isaiah McCoy, CPA
Isaiah McCoy is a Certified Public Accountant (CPA) in Miami, Florida with over a decade of experience in tax, accounting, and financial analysis. He holds a Bachelor of Science degree in accountancy and a Master of Taxation degree from Arizona State University. Isaiah has also earned a Master of Business Administration with a finance concentration from LSU Shreveport. Isaiah has worked within several industries, including public accounting (serving clients in the natural resources, real estate, and not-for-profit sectors), higher education, and healthcare. In his free time, he enjoys traveling and watching soccer and is fluent in Spanish.
Doing your taxes for the first time as a freelancer can be daunting. On top of managing clients, putting away savings, staying on top of quarterly payments, and making sure you get the best possible write-offs, plenty of tax questions are sure to come up along the way. What if I forgot to keep something? How much should I put away for retirement? What if I get audited?
Like any new task, filing taxes as a freelancer will get easier the more you do it (especially if you file with Keeper). But for now, whether you're new to being your own boss or just freshening up your record-keeping system, here's all you need to know about tax records and how long you'll need to keep them.
While the magic number for how long you should hang on to your records is generally three years, there are some exceptions to consider.
Here’s how long you should keep various types of tax records, organized by time frame.
| Type of record | How long should I keep it? |
|---|---|
| Receipts | 3 years |
| Past tax returns | 3 years |
| W-2 tax records | 3 years |
| Deducted costs of bad debts | 7 years |
| Omitted income from past returns | 6 years |
The three-year period, or the "statute of limitations," refers to the amount of time after filing in which the Internal Revenue Service (IRS) can “review, analyze, or solve” your tax-related issues. If you were to get audited, the IRS would conduct an audit within this time frame.
The IRS can inquire about unfiled returns at any time — there’s no three-year period of limitations if you haven’t filed at all.
Yes, especially for contractors. Under certain circumstances, the duration of keeping tax records for a business may extend beyond the standard three years. Here are some circumstances where you might want to hang on to your records for longer.
Not filing can have serious consequences. Evading taxes and getting caught can lead to ongoing IRS pursuit, so even if you've had a slow year, file no matter what!
To avoid receiving a negligence penalty, which happens when you can’t prove you qualified for the credits or deductions you received, it’s also smart to keep copies of your receipts for purchases over $75. If you’ve made a big purchase and can’t find the receipt, contact the vendor and ask for a copy for your records.
It’s important to keep a record of all your tax returns as part of your tax records, which is pretty easy these days — most digital filing tools, including Keeper, keep a record for you. Keeping returns is important in case you need to:
If you can't find your most current tax return, though, don't stress. The IRS also hangs on to them, and you can request a copy.
Nope! There is no required system. However, it probably helps to have some method to the madness so you can find anything you need regarding income and expenses should the IRS come around. Common methods of record-keeping include:
You’ve probably had that moment when you reach into your wallet to pay for something and instead of finding cash, you end up with a fistful of old receipts. Of course, there are times when receipts come in handy (purchases made for a meeting or reimbursable travel expenses, for example), but most of the time, you can account for your business expenses in other ways.
As mentioned above, cash purchases under $75 are typically not worth saving receipts for, but there are some nuances and exceptions to this rule.
While the IRS doesn’t expressly require receipts for small purchases during business travel, you should hang on to your receipts for lodging, even if the cost was under $75. It’s likely that you booked a hotel online, so the record is digital anyway, but if you happened to pay in cash, make sure to hang on to the document.
The IRS has a list of acceptable documents for tracking expenses during tax season, and you'll probably be happy to see that "paper receipts" isn’t at the top of the list!
The following are accepted by the IRS:
It's safe to say that most freelancers rely on digital records when it comes time to file. Keeper will automatically log write-offs, then take those deductions into account when you file your taxes.
In general, keeping all business records showing income or proof of business is a smart move. Examples of business records you’ll want to hang on to include:
Digitizing your information is recommended, especially after the three-year mark has passed. Consider using a service like Dropbox or a physical hard drive, especially if you’ve failed to file a return in the past.
An Upwork study from 2023 found that 38% of the US workforce does freelance work, a number that is expected only to increase in the coming years. With greater numbers comes more opportunities and resources, making filing taxes when you’re self-employed much easier than it used to be!
Don’t panic! Losing a return is pretty common (well, at least common enough that the IRS allows you to request a new one). You will need to fill out Form 4506 to request your return, however, which can take up to 75 days to process. Your filing service may also be able to provide a copy of your return.
Most of the time, yes! The IRS is often happy with bank statements. But remember, there are exceptions to the rule. Keep receipts for cash purchases exceeding $75, such as a laptop or home office equipment. Additionally, if you are on a work trip, you must retain lodging payment receipts, regardless of the amount.
Jesus Morales-Grace, EA contributed to this article.
Amanda Gray is a freelance woodworker, illustrator, and writer who covers various topics, from coworking to travel. She is passionate about language, literature, and furniture making. An early adopter of remote work, much of her professional life had been centered around elevating and supporting freelance professionals in the creative fields.
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