Records Retention

Records Retention Guide Storing tax records: How long is long enough? 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% 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
1 Years 3 Years 6 Years Forever	1 Years 3 Years 6 Years Forever
Special Circumstances
Business Documents To Keep For 1 Year
Correspondence with Customers and Vendors Purchase Orders Receiving Sheets Duplicate Deposit Slips Requisitions Stenographer's Notebooks Stockroom Withdrawal Forms
Business Documents To Keep For 3 Years
Bank Statements & Reconciliations Employee Personnel Records (after termination) Employment Applications Expired Insurance Policies General Correspondence Internal Reports Petty Cash Vouchers Physical Inventory Tags Bond Registration Records of Employees Time Cards For Hourly Employees
Business Documents To Keep For 6 Years
Accident Reports, Claims Accounts Payable Ledgers & 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 & Summaries, including payment to pensioners Plant Cost 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 Documents To Keep For 1 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 3 Years
Credit Card Statements Medical Bills (in case of insurance disputes) Expired Insurance Policies Utility Records
Personal Documents To Keep For 6 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 the life of the warranty) Stock and Bond Records (keep for 6 years after 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)