Record Retention

Storing Tax Records: How Long Is Long Enough?

After April 15 passed, we were finished with another year of tax forms and shoeboxes full of receipts. But what should you do with such records once your request for a check or refund has been sent in the mail?

Accountant Reading A Graph — Mountain Home, AR — The Callen Accounting Group PLLC

You must keep copies of your tax returns and accompanying documentation for three years in accordance with federal law. The "three-year law" gives many people the impression that they are safe as long as they keep their paperwork on hand for this amount of time.


However, the IRS may go back six years in an audit if it thinks you have materially underreported your income (by 25% or more). There is no statute of limitations if there is any hint of fraud or if you fail to file a return. Use the following advice to be safe.

Business Record Guidelines

Business Documents to Keep for One Year

  • Duplicate deposit slips, Customer and Vendor correspondence
  • Procurement Orders (other than Purchasing Department copy)
  • Receiving Records
  • Requisitions
  • Notebooks for stenographers
  • Forms for Stockroom Withdrawals

Business Documents to Keep for Three Years

  • Personnel Records of Employees (after termination)
  • Applications for jobs Expired insurance policies
  • All Other Correspondence
  • Reports on internal audits
  • Inside Reports
  • Petty Cash Receipts
  • Physical Inventory Tags Employee Records for Savings Bond Registration Timecards for Hourly Employees

Business Documents to Keep for Six Years

  • Reports of accidents, claims
  • Accounts Schedules and Ledgers of Receivables
  • Schedules and Ledgers for Receivables
  • Reconciliations and Bank Statements
  • Returned Checks
  • Cancelled Bond and Stock Certificates
  • Records of Employment Taxes
  • Cost Analysis and Schedules for Cost Distribution
  • Expiring Leases and Contracts
  • Records of Expiring Options
  • Products, materials, and supply inventories
  • Bills for Customers
  • Notes Ledgers of Receivables and Schedules
  • Payroll Summaries and Records, Including Pension Payments
  • Plant Ledgers of Cost
  • Department of Procurement A copy of each purchase order
  • Net operating losses (NOLs) documentation
  • Sales Records
  • Associated Ledgers
  • Books Time
  • Records for travel and entertainment
  • Payment receipts for vendors, employees, etc.
  • Schedules, the Voucher Register

Business Documents to Keep Forever

Although federal regulations do not force you to keep tax records "forever," there are often other reasons you'll want to keep this information for as long as possible.

  • Audit Reports Checks for Significant Transactions (especially tax payments)
  • Cash books and account charts
  • Agreements, Leases presently in force
  • Corporate Records (incorporation, charter, by-laws, etc.)
  • documents supporting the addition of fixed assets
  • Schedules for Depreciating Deeds
  • Accounting Statements (Year End)
  • Year-end trial balances for General and Private Ledgers
  • Current accident reports, insurance records, claims, and policies
  • Investment Trade Acknowledgements
  • Reports from IRS Revenue Agents
  • Journals
  • Legal documents, correspondence, and other significant information
  • Minutes Directors' and stockholders' books
  • Mortgages, Bills of Sale, and External Appraisers' Property Appraisals
  • Property Documents
  • Pension and Retirement Records
  • sheets and tax returns
  • Patent and Trademark Registrations

Personal Record Guidelines

Personal Documents to Keep for One Year

While it's crucial to maintain year-end mutual fund and IRA contribution statements for ever, once the year-end statement is received, you don't need to keep track of monthly and quarterly statements.

Personal Documents to Keep for Three Years

  • Statements for credit cards
  • medical expenses (in case of insurance disputes)
  • Utility Data Expiring Insurance Coverages.

Personal Documents to Keep for Six Years

  • Documentation to Support Tax Returns
  • Reports of Accidents and Claims
  • medical expenses (if tax-related)
  • Sales Invoices
  • Garnishments of wages
  • Additional Tax Bills

Personal Documents to Keep Forever

  • Audit Reports by CPAs
  • Legal Documents
  • Messages of Importance
  • Returns for tax filing
  • Checks for the payment of taxes
  • Property records and receipts for improvements (or six years after property sold)
  • Investment Trade Acknowledgements
  • Pension and Retirement Records (Forms 5448, 1099-R and 8606 until all distributions are made from your IRA or other qualified plan)

Special Circumstances

  • Auto Records (keep until the car is sold)
  • Receipts from credit cards (keep until verified on your statement)
  • Assurance Plans (keep for the life of the policy)
  • Loans, Deeds, and Leases (keep 6 years beyond the agreement)
  • pay slips (keep until reconciled with your W-2)
  • Sales Invoices (keep for life of the warranty)
  • Records for Stock and Bonds (keep for 6 years beyond selling)
  • Instructions and Warranties (keep for the life of the product)
  • Various Bills (keep until payment is verified on the next bill)
  • Depreciation schedules and other records relating to capital assets (keep for 3 years after the tax life of the asset)

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