What Records Should I Keep and For How Long?
Record-keeping for travelers involves considerably more than hanging on to a shoebox stuffed full of old receipts. If you are audited and do not have the necessary documents, you risk losing the tax-free status of your per diems and other reimbursements. That can add up to about 15-25% of the total in taxes (Ouch!). With that in mind, check out this list of dos and don’ts to make record keeping a little less of a headache. The video below will also give you a little more insight as to how this affects W2 employees vs independent contractors.
KEEP COPIES OF ALL CONTRACTS! We’re sure you know this already, but every traveler needs to keep copies of their travel contracts! Companies do not keep them for you, and those online versions can disappear after 1-2 years. In case of an audit, it is your only proof that you really had a temporary assignment and get to keep all those per diems tax-free!
Keep receipts! Especially for things we ask you for in our workbook. While your credit card statements may help you in preparing your tax returns, it is the actual receipt that the IRS will require from you to prove that you “used up” your travel cash. This includes receipts from lodging expenses at the assignment, a mileage log, uniforms, continuing expenses, and other necessary expenses. To help keep track of your travel expenses, you can request a receipt envelope here.
Proof of maintaining your tax home.
DO NOT save any grocery or food receipts while on assignment. Those are covered under the meal per diems, and your contract shows that you were away from home.
DO NOT save gas receipts unless you are renting a vehicle. If renting a car, you need to save gas, and all related receipts plus keep a mileage record. A leased car (long term) gets treated as an owned car, so you just need to keep track of miles.