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Retention Guide

How long should you store tax records?

Federal law requires you to keep copies of your tax returns and supporting documents for three years. Called the "three-year law," this leads many people to think they're safe if they retain their documents for this length of time.

However, if the IRS thinks you have under reported your income significantly by 25% or more, they may go back six years for an audit. If there's any indication of fraud, or if you don't file a return, there are no limitations. Use the following guidelines to be safe.

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

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
Bank statements and reconciliations
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

Even though federal guidelines don't require you to keep your tax records forever, there can be other reasons you'll want to keep 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 agent 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 One Year

It's important to keep your year-end mutual fund and IRA contribution statement indefinitely. However, you don't need to save monthly and quarterly statements after you've gotten your year-end statement.

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)
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
Property records / improvement receipts (or six years after property sold)
Investment trade confirmations
Retirement and pension records (forms 5448, 1099-R and 8606 until all distributions are made from your IRA or another qualified plan)

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)
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)