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|
Policy life + 3 years Note 3
|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.