Record Retention Guide

How long should you keep your tax and financial records?

The federal “three-year law” specifies that you maintain copies of tax returns and supporting documents for three years.

But that’s not always enough. If the IRS conducts an audit because they suspect underreporting of income, they can go back six years in an audit.

The following is a guide to be “on the safe side”.

Business Records To Keep…Personal Records To Keep…
        1 Year        1 Year
        3 Years        3 Years
        6 Years        6 Years
        Forever        Forever
 
Special Circumstances

It’s also good advice to create a backup set of records and store them electronically. If the original records are on paper, you can scan them and convert them to digital format for storage on a CD or similar external storage device, or you can store them online, “in the cloud”.

Remember to help protect yourself against identity theft by shredding unneeded documents rather than throwing them out intact.

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

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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

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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

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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
      • Minute 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

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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) 
      • Utility Records
      • Expired Insurance Policies 

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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

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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

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Special Circumstances

    • Car Records (keep until the car is sold)
    • Credit Card Receipts (keep with your credit card 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 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)