Kinds of Records To Keep: Farm Business Taxes (2025 IRS Guide)

This guide covers “Kinds of Records To Keep” within farm business taxes. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 225 (2025), Farmer's Tax Guide, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Kinds of Records To Keep

Except in a few cases, the law does not require any specific kind of records. You can choose any recordkeeping system suited to your farming business that clearly shows, for example, your income and expenses.

You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. If you are in more than one business, you should keep a complete and separate set of records for each business. A corporation’s recordkeeping system should include board of directors meeting minutes. See chapter 2 for more information.

Your recordkeeping system should include a summary of your business transactions, which shows your gross income, as well as any expenses, deductions, and credits you are reporting. In addition, you must keep supporting documents, such as invoices and receipts, for purchases, sales, payroll, and other business transactions.

It is important to keep these documents because they support the entries in your journals and ledgers and on your tax return. Keep them in an orderly fashion and in a safe place. For instance, organize them by year and type of income or expense.

Electronic records.

All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. When you replace hard copy books and records, you must maintain the electronic storage systems for as long as the systems are material to the administration of tax law.

An electronic storage system is any system for preparing or keeping your records either by electronic imaging or by transfer to electronic storage media. The electronic storage system must index, store, preserve, retrieve, and reproduce the electronically stored books and records in legible format. All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS.

Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. The original hard copy books and records may be destroyed, provided that the electronic storage system has been tested to establish that the hard copy books and records are being reproduced in compliance with IRS requirements for an electronic storage system and procedures are established to ensure continued compliance with all applicable rules and regulations. You still have the responsibility of retaining any other books and records that are required to be retained.

The IRS may test your electronic storage system, including the equipment used, indexing methodology, software, and retrieval capabilities. This test is not considered an examination and the results must be shared with you. If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. If not, you may be subject to penalties for noncompliance, unless you continue to maintain your original hard copy books and records in a manner that allows you and the IRS to determine your correct tax. For details on electronic storage system requirements, see Revenue Procedure 97-22. You can find Revenue Procedure 97-22 on page 9 of Internal Revenue Bulletin 1997-13 at
IRS.gov/pub/irs-irbs/irb97-13.pdf.

Travel, transportation, entertainment, and gift expenses.

Specific recordkeeping rules apply to these expenses. For more information, see Pub 463.

Employment taxes.

There are specific employment tax records you must keep. Payroll records are important when claiming various tax deductions and credits based on payroll items such as number of employees and wages paid. For a list of employment tax records you must keep, see Pub. 15.

Excise taxes.

See How To Claim a Credit or Refund in chapter 14 for the specific records you must keep to verify your claim for credit or refund of excise taxes on certain fuels.

Assets.

Assets are the property, such as machinery and equipment, you own and use in your business. You must keep records to verify certain information about your business assets. You need records to figure your annual depreciation deduction and the gain or loss when you sell the assets. Your records should show all the following.

• When and how you acquired the asset (whether the asset was new or used).

• Full purchase cost of the asset.

• Cost of any improvements.

• Section 179 deduction taken.

• Deductions taken for depreciation and any special depreciation allowance.

• Deductions taken for casualty losses, such as losses resulting from fires or storms.

• How you used the asset.

• When and how you disposed of the asset.

• Fair market value of property when traded.

• Selling price.

• Expenses of sale.

The following are examples of records that may show this information.

• Invoices, bills of sale, and receipts.

• Real estate closing statements.

• Canceled checks.

• Bank and credit card statements.

Financial account statements as proof of payment.

If you do not have a canceled check, you may be able to prove payment with certain financial account statements prepared by financial institutions. These include account statements prepared for the financial institution by a third party. These account statements must be legible. The following table lists acceptable account statements.

.Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost..

Tax returns.

Keep copies of your filed tax returns. They help in preparing future tax returns and making computations if you file an amended return. Keep copies of your information returns such as Form 1099-NEC, Form 1099-MISC, Schedule K-1, and Form W-2.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

• Publication 225 (2025), Farmer's Tax Guide: Importance of Records — Kinds of Records To Keep — Internal Revenue Service; 2025 edition.

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.