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| Record Retention
Storing tax records: How long is long
enough?
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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. |
| Business Records To
Keep... |
Personal Records To Keep... |
Business
Document To Keep For One Year
- Correspondence with Customers and
Vendors
- Duplicate Deposit Slips
- Purchase Orders (other than
Purchasing Department copy)
- Receiving Sheets
- Requisitions
- Stenographer’s Notebooks
- Stockroom Withdrawal Forms
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Business
Documents To Keep For Three Years
- Bank Statements and Reconciliation's
- Employee Personnel Records (after
termination)
- Employment Applications
- Expired Insurance Policies
- General Correspondence
- Internal Audit Reports
- Internal Reports
- Petty Cash Vouchers
- Physical Inventory Tags
- Savings Bond Registration Records of
Employees
- Time Cards For Hourly Employees
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Business
Documents To Keep For Six Years
- Accident Reports, Claims
- Accounts Payable Ledgers and
Schedules
- Accounts Receivable Ledgers and
Schedules
- Cancelled Checks
- Cancelled Stock and 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 payment to pensioners
- Plant Cost Ledgers
- Purchasing Department Copies of
Purchase Orders
- Sales Records
- Subsidiary Ledgers
- Time Books
- Travel and Entertainment Records
- Vouchers for Payments to Vendors,
Employees, etc.
- Voucher Register, Schedules
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Business Records To
Keep Forever While federal
guidelines do not require you to keep tax records "forever," in
many cases there will be other reasons you'll want to retain
these documents indefinitely.
- Audit Reports from CPAs/Accountants
- Cancelled Checks for Important
Payments (especially tax payments)
- Cash Books, Charts of Accounts
- Contracts, Leases Currently in Effect
- Corporate Documents (incorporation,
charter, by-laws, etc.)
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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
- Trademark and Patent Registrations
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Personal
Document To Keep For One Year
- While it's 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.
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Personal
Documents To Keep For Three Years
- Credit Card Statements
- Medical Bills (in case of insurance
disputes)
- Utility Records
- Expired Insurance Policies
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Personal
Documents To Keep For Six 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
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Personal Records To
Keep Forever
- CPA Audit Reports
- Legal Records
- Important Correspondence
- Income Tax Returns
- Income Tax Payment Checks
- Investment Trade Confirmations
- Retirement and Pension Records
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Special Circumstances
- Car 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)
- Pay Stubs (keep until reconciled with
your W-2)
- 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)
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