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), it may go back six years in an audit. If there is any indication of fraud, or you do not file a return, no period of limitation exists.To be safe, use the following guidelines.

GUIDELINES

Business Records To Keep... Personal Records To Keep...
1 Year 1 Year
3 Year 3 Year
6 Year 6 Year
Forever Forever
Special Circumstances

Business Records

  • 1. Correspondence with Customers and Vendors

    2. Duplicate Deposit Slips

    3. Purchase Orders (other than Purchasing Department copy)

    4. Receiving Sheets

    5. Requisitions

    6. Stenographer's Notebooks

    7. Stockroom Withdrawal Forms

  • 1. Employee Personnel Records (after termination)

    2. Employment Applications

    3. Expired Insurance Policies

    4. General Correspondence

    5. Internal Audit Reports

    6. Internal Reports

    7. Petty Cash Vouchers

    8. Physical Inventory Tags

    9. Savings Bond Registration Records of Employees

    10. Time Cards For Hourly Employees

  • 1. Accident Reports, Claims

    2. Accounts Payable Ledgers and Schedules

    3. Accounts Receivable Ledgers and Schedules

    4. Bank Statements and Reconciliations

    5. Cancelled Checks

    6. Cancelled Stock and Bond Certificates

    7. Employment Tax Records

    8. Expense Analysis and Expense Distribution Schedules

    9. Expired Contracts, Leases

    10. Expired Option Records

    11. Inventories of Products, Materials, Supplies

    12. Invoices to Customers

    13. Notes Receivable Ledgers, Schedules

    14. Payroll Records and Summaries, including payment to pensioners

    15. Plant Cost Ledgers

    16. Purchasing Department Copies of Purchase Orders

    17. Records related to net operating losses (NOL's)

    18. Sales Records

    19. Subsidiary Ledgers

    20. Time Books

    21. Travel and Entertainment Records

    22. Vouchers for Payments to Vendors, Employees, etc.

    23. Voucher Register, Schedules

  • 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.

    1. Audit Reports from CPAs/Accountants

    2. Cancelled Checks for Important Payments (especially tax payments)

    3. Cash Books, Charts of Accounts

    4. Contracts, Leases Currently in Effect

    5. Corporate Documents (incorporation, charter, by-laws, etc.)

    6. Documents substantiating fixed asset additions

    7. Deeds

    8. Depreciation Schedules

    9. Financial Statements (Year End)

    10. General and Private Ledgers, Year End Trial Balances

    11. Insurance Records, Current Accident Reports, Claims, Policies

    12. Investment Trade Confirmations

    13. IRS Revenue Agent Reports

    14. Journals

    15. Legal Records, Correspondence and Other Important Matters

    16. Minutes Books of Directors and Stockholders

    17. Mortgages, Bills of Sale

    18. Property Appraisals by Outside Appraisers

    19. Property Records

    20. Retirement and Pension Records

    21. Tax Returns and Worksheets

    22. Trademark and Patent Registrations

Personal Records

For One Year

For Three Year

For Six Year

Forever

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.

  • Credit Card Statements

  • Medical Bills (in case of insurance disputes)

  • Utility Records

  • Expired Insurance Policies

  • Supporting Documents For Tax Returns

  • Accident Reports and Claims

  • Medical Bills (if tax-related)

  • Sales Receipts

  • Wage Garnishments

  • Other Tax-Related Bills

  • CPA Audit Reports

  • Legal Records

  • Important Correspondence

  • Income Tax Returns

  • Income Tax Payment Checks

  • Property Records / Improvement Receipts (or six years after property sold)

  • Investment Trade Confirmations

  • Retirement and Pension Records (Forms 5448, 1099-R and 8606 until all distributions are made from your IRA or other qualified plan)

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)

  • 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)