Tax Record Retention Requirements

We receive many inquires each year about how long you should keep tax related records.  Tax returns can generally be audited for up to three years after filing and up to six years if the IRS suspects under reported income.  It is advisable to keep tax records at least seven years after a return is filed.  Electronic records are the same as paper records so feel free to scan everything and dispose of the paper.

The following list provides general guidelines to how long you should each type of record.

Individual Records Retention Period   Employee/Employment Records Retention Period
Bank Statements 7 years   Benefit Plans Permanent
Charitable contribution documentation 7 years   Employee files ex-employees 7 years  Note 4
Credit card statements 7 years   Employee applications 3 years
Receipts & logs pertaining to tax returns 7 years   Employee tax statements 7 years
Investment purchases & sales slips Ownership + 7 years   Payroll records 7 years
Dividend reinvestment records Ownership + 7 years   Pension/profit sharing plans Permanent
Year-end brokerage statements Ownership + 7 years      
Mutual fund annual statements Ownership + 7 years   Bank Records Retention Period
Investment property purchase documents Ownership + 7 years   Bank Reconciliations 7 years
Home purchase documents Ownership + 7 years   Bank Statements 7 years
Home improvement receipts & cancelled checks Ownership + 7 years   Cancelled checks 7 years  Note 2
Home repair receipts & cancelled checks Warranty period of item   Electronic payment records 7 years
Retirement plan annual reports Permanent      
IRA annual reports Permanent   Real Property Records Retention Period
IRA nondeductible contributions (Form 8606) Permanent   Construction records Permanent
Insurance policies

Policy life + 3 years Note 3

  Leasehold improvements


Divorce documents Permanent   Lease payment records Life of lease + 4 years
Loans Term of loan + 7 years   Real estate purchase Permanent
Estate planning documents Permanent      

Note 1 - Permanent for last-in-first-out system.

Note 2 - Permanent for real estate purchases.

Note 3 - Check with your agent.  Liability for prior years can vary.

Note 4 - Or statute of limitations for employee lawsuits.

Business Accounting Records Retention Period   Corporate Records Retention Period
Accounts payable 7 years   Tax Returns 7 years
Accounts receivable 7 years   Tax Returns Permanent
Audit Reports Permanent   Forms W-2 7 years
Chart of accounts Permanent   Forms 1099 7 years
Depreciation schedules Permanent   Cancelled Checks 7 years
Expense records 7 years   Bank deposit slips 7 years
Financial statements - Annual Permanent   Leases/mortgages Permanent
Fixed asset purchases Permanent   Patents/trademarks Permanent
General ledger Permanent   Shareholder records Permanent
Inventory records 7 years   Note 1   Stock registers Permanent
Loan payment schedules 7 years   Stock transactions Permanent
Purchase orders 7 years   Board minutes Permanent
Sales records 7 years   Bylaws Permanent
Tax returns Permanent   Business licenses Permanent
      Contracts - major Permanent
      Contracts - minor

Contract Life + 4 years

      Insurance policies Policy Life + 3 years


As always, please feel free to contact us if you have any questions.