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 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 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
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
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
