Storing tax records: How long is long enough? What you should keep.

We have included a Tax Center Section which annually helps with the different tax rates and tax due dates, and a record retention guide which indicates how long different records or documents should be kept for. Access to pertinent and relevant information is critical to sound and prudent decision making. Storage of information often becomes a costly and logistical nightmare. Learn what you need to keep. All of the information contained within this website is provided for informational purposes only, and is not intended to be a substitute for obtaining accounting, tax, or financial advice from a professional accountant.

Storing tax records: How long is long enough? What you should keep.

Tax Returns are filed, and forms and boxes full of receipts are left for us to store. What should be done with those documents after your tax return is filed and your check or refund request is in the mail? Federal law requires you to maintain copies of your tax returns and supporting documents for a minimum of 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, or if the IRS believes there may be evidence of fraud, it may go back indefinitely. Identity theft is rampant, and it is important to take precautions 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 should dispose of these records by shredding them. To be safe, use the following guidelines.

 

Business Documents 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

Business Documents to Keep For Three Years

Bank Statements and Bank Reconciliations Employee Personnel Records (current and terminated employees) 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

Business Documents to Keep For Six Years

Accident Reports, Claims Accounts Payable Ledgers and Detail Schedules Accounts Receivable Ledgers and Detail 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/Calendars Travel and Entertainment Records Vouchers for Payments to Vendors, Employees, etc. Voucher Registers, Schedules

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.) 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

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.

Personal Documents to Keep For Three Years

Credit Card Statements Medical Bills (in case of insurance disputes) Utility Records Expired Insurance Policies

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

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

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)