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Record 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 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.
Personal Documents To Keep For One Year
Bank Statements
Paycheck Stubs (reconcile with W-2)
Canceled checks
Monthly and quarterly mutual fund and retirement contribution statements (reconcile with year end statement)
Personal Documents To Keep For Three Years
Credit Card Statements
Medical Bills (in case of insurance disputes)
Expired Insurance Policies
Personal Documents To Keep For Six Years
Tax Returns
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
Retirement and Pension Records
Business Documents To Keep For Three Years
Employee Personnel Records (after termination)
Employment Applications
Expired Insurance Policies
General Correspondence
Savings Bond Registration Records of Employees
Business Documents To Keep For Six Years
Accident Reports, Claims
Bank Statements and Reconciliations
Cancelled Checks
Employment Tax Records
Expired Contracts, Leases
Inventories of Products, Materials, Supplies
Invoices to Customers
Notes Receivable Ledgers, Schedules
Payroll Records and Summaries, including payment to pensioners
Purchasing Department Copies of Purchase Orders
Sales Records
Travel and Entertainment Records
Vouchers for Payments to Vendors, Employees, etc.
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)
Contracts, Leases Currently in Effect
Corporate Documents (incorporation, charter, by-laws, etc.)
Deeds
Insurance Records, Current Accident Reports, Claims, Policies
Investment Trade Confirmations
IRS Revenue Agents' Reports
Legal Records, Correspondence and Other Important Matters
Mortgages, Bills of Sale
Property Appraisals by Outside Appraisers
Property Records
Retirement and Pension Records
Trademark and Patent Registrations
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