MM Money

Save Electronic Checks for Your Taxes

If my bank stops sending canceled checks, what would I need to keep for tax time to prove I made a charitable contribution or a deductible business expense? And what about bills I paid through my bank's online bill-paying service -- what documentation do I need to keep for my taxes when I pay bills that way?

The Check Clearing for the 21st Century Act -- also called Check 21 -- goes into effect Thursday. The new rules make it easier for banks to process checks electronically without having to wait for paper checks to physically change hands. But most of the changes are behind the scenes. You'll still have plenty of documentation for your tax files.

Your bank may no longer send you the canceled checks, but you should still be able to download copies of the canceled checks from the bank's Web site or you may receive images of canceled checks with your bank statement, generally at no extra cost, says Richard Winston, a partner in the financial services group of Accenture, a management consulting and technology services company. The IRS accepts either of those documents for tax purposes.