Guides / How Long Should Contractors Keep Receipts for Taxes?

How Long Should Contractors Keep Receipts for Taxes?

Updated 2026-10-08

The short answer: usually three years — sometimes longer

The IRS's general rule is to keep the records that support your income and deductions until the period of limitations for that tax return runs out. For most people in most years that's three years from the date you filed. A few situations stretch it:

• 3 years — the standard case
• 6 years — if you leave out income you should have reported and it's more than 25% of the gross income shown on the return
• 7 years — if you claim a loss from worthless securities or a bad-debt deduction
• No limit — if you don't file a return, or file a fraudulent one
• At least 4 years — employment tax records, if you have employees
• Equipment and other property — until the limitation period ends for the year you sell or dispose of it, since you need the purchase records to work out depreciation and any gain or loss

This is general information drawn from the IRS's own guidance on how long to keep records, not tax advice. Your accountant can tell you exactly what applies to you, and it's worth asking before you throw anything away.

Which receipts actually matter for a trade business

Anything that backs up a business deduction. For most trades that means the same handful of categories, over and over:

• Materials & supplies — usually the biggest pile, and the easiest to lose track of
• Tools & equipment — keep these for as long as you own the item
• Fuel, and vehicle & maintenance costs
• Subcontractors — what you paid, to whom, and for which job
• Insurance & licenses, permits & fees
• Marketing, and office & software costs

Does a photo of a receipt count?

The IRS has accepted electronic records for a long time, provided they're accurate, complete and legible — the rules for storing books and records electronically are set out in Revenue Procedure 97-22. In practice, a clear photo showing the vendor, the date, the amount and what was bought captures the part of a receipt that matters. If you're unsure, particularly for large equipment purchases, keep the paper as well and ask your accountant.

One thing worth knowing: most till receipts are printed on thermal paper, which fades — sometimes within months, faster in a hot truck. A receipt that's unreadable by the time anyone needs it doesn't support much. Photographing it on the day is often the only reliable copy.

The receipt you never logged is the one that costs you

A deduction you can't support with a record is a deduction you can't safely claim, and a material cost that never got logged is also a cost that never got billed back to the job. Both problems have the same cause: the receipt went in a pocket and stayed there.

How Trades Chaser keeps them

On the Enhanced plan, the receipt tracker turns a photo into a logged expense: AI reads the vendor, amount, date and category for you to check and save, and the photo stays attached to the expense record. Log it against the invoice it belongs to and that job's profit updates too. Expenses use the same categories listed above, so at year end they're already sorted the way your accountant will want them. On Base you record expenses by hand with the same categories, budgets and job costing.