Retention Guide
Storing tax records: How long is long enough?
April 15 has come and gone and another year of tax forms and shoeboxes full of receipts is behind us. But what should be done with those documents after your check or refund request is in the mail?
Federal law requires you to maintain copies of your tax returns and supporting documents for three years. This is called the “three-year law” and leads many people to believe they’re safe provided they retain their documents for this period of time.
However, if the IRS believes you have significantly underreported your income (by 25 percent or more), or believes there may be indication of fraud, it may go back six years in an audit. To be safe, use the following guidelines.
Caution: Identity theft is a serious threat in today’s world, and it is important to take every precaution to avoid it. After it is no longer necessary to retain your tax records, financial statements, or any other documents with your personal information, you must dispose of these records by shredding them and not disposing of them by merely throwing them away in the trash.
Business – keep for 1 year
- Correspondence w/customers & vendors
- Duplicate deposit slips
- Purchase orders (other than purchasing department copy)
- Receiving sheets
- Requisitions
- Stenographer’s notebooks
- Stockroom withdrawal Forms
Business – keep for 3 years
- Bank statements & reconciliations
- Employee personnel records (after termination)
- Employment applications
- Expired insurance policies
- General correspondence
- Internal audit reports
- Petty cash vouchers
- Physical inventory tags
- Savings bond registration records of employees
- Time cards for hourly employees
Business – keep for 6 years
- Accident Reports, claims
- Accounts payable ledgers and schedules
- Accounts receivable ledgers and schedules
- Cancelled checks
- Cancelled stock & bond certificates
- Employment tax records
- Expense analysis and expense distribution schedules
- Expired contracts, leases
- Expired option records
- Inventories of products, materials, supplies
- Invoices to customers
- Notes receivable ledgers, schedules
- Payroll records and summaries, including payments to pensioners
- Plant cost ledgers
- Time books
- Travel and entertainment records
- Vouchers for payments to vendors, employees, etc.
- Voucher register, schedules
Business – keep forever
Although not required by federal guidelines to keep records forever, in many cases there will be other reasons you may want to retain these documents indefinitely.
- Audit reports from CPAs/Accountants
- Cancelled checks for important payments (especially tax payments)
- Cash books, chart of accounts
- Contracts, leases currently in effect
- Corporate documents (incorporation, charter, by-laws, etc.)
- Documents substantiating fixed asset additions
- Deeds
- Depreciation schedules
- Financial statements (year end)
- General and private ledgers, year end trial balances
- Insurance records, current accident reports, claims, policies
- Investment Trade Confirmations
- IRS Revenue Agents Reports
- Journals
- Legal Records, Correspondence and Other Important Matters
- Minutes Books of Directors and Stockholders
- Mortgages, Bills of Sale
- Property Appraisals by Outside Appraisers
- Property Records
- Retirement and Pension Records
- Tax Returns and Worksheets
Personal – keep for 1 year
- Important to keep year-end mutual fund and IRA contribution statements forever, you don?t have to save monthly and quarterly statements once the year end statement has arrived
Personal – keep for 3 years
- Credit Card Statements
- Medical Bills (in case of insurance disputes)
- Utility Records
- Expired insurance policies
Personal – keep for 6 years
- Supporting documents for tax returns
- Accident reports and claims
- Medical bills (if tax related)
- Property records / improvement receipts
- Sales receipts
- Wage garnishments
- Other tax related bills
- Personal keep forever
- CPA Audit reports
- Legal records
- Important correspondence
- Income tax returns
- Income tax payment checks
- Investment trade confirmations
- Retirement and pension records
Special circumstances
- Care records (keep until the car is sold)
- Credit card receipts (keep until verified on your statement)
- Insurance policies (keep for the life of the policy)
- Mortgages/deeds/leases (keep 6 years beyond the agreement)
- Paystubs (keep until reconciled with your w2)
- Property records / improvement receipts (keep until property sold)
- Sales receipts (keep for life of the warranty)
- Stock and bond records (keep for 6 years beyond selling)
- Warranties and instructions (keep for the life of the product)
- Other bills (keep until payment is verified on the next bill)
- Depreciation schedules and other capital asset records (keep for 3 years after the tax life of the asset)
