Effective Tax Record Storage: How Long to Keep Documents

Federal law mandates retaining copies of tax returns and supporting documents for three years, known as the “three-year law.” While this may seem sufficient, certain circumstances could warrant extending this period to six years. It’s crucial to follow guidelines for both business and personal records to ensure compliance and readiness for potential audits.

Business Records To Keep:

For One Year:

  • Stenographer’s Notebooks
  • Requisitions
  • Receiving Sheets
  • Purchase Orders (excluding Purchasing Department copy)
  • Duplicate Deposit Slips
  • Correspondence with Customers and Vendors
  • Stockroom Withdrawal Forms

For Three Years:

  • Time Cards for Hourly Employees
  • Savings Bond Registration Records of Employees
  • Physical Inventory Tags
  • Petty Cash Vouchers
  • Internal Reports
  • Internal Audit Reports
  • General Correspondence
  • Expired Insurance Policies
  • Employment Applications
  • Employee Personnel Records (post-termination)

For Six Years:

  • Vouchers for Payments to Vendors, Employees, etc.
  • Sales Records
  • Payroll Records and Summaries, including pension payments
  • Invoices to Customers
  • Employment Tax Records
  • Cancelled Checks
  • Bank Statements and Reconciliations
  • Accounts Payable and Receivable Ledgers and Schedules
  • Accident Reports, Claims

To Keep Forever:

  • Tax Returns and Worksheets
  • Legal Records, Correspondence, and Other Important Matters
  • IRS Revenue Agents’ Reports
  • Investment Trade Confirmations
  • Insurance Records, Current Accident Reports, Claims, Policies
  • Financial Statements (Year End)
  • Corporate Documents (incorporation, charter, by-laws, etc.)
  • Cancelled Checks for Significant Payments
  • Audit Reports from CPAs/Accountants

Personal Documents To Keep:

For One Year:

  • Canceled Checks
  • Paycheck Stubs (reconcile with W-2)
  • Bank Statements
  • Monthly and quarterly mutual fund and retirement contribution statements

For Three Years:

  • Expired Insurance Policies
  • Utility Records
  • Medical Bills (in case of insurance disputes)
  • Credit Card Statements

For Six Years:

  • Other Tax-Related Bills
  • Wage Garnishments
  • Sales Receipts
  • Property Records / Improvement Receipts
  • Medical Bills (if tax-related)
  • Accident Reports and Claims
  • Supporting Documents for Tax Returns

To Keep Forever:

  • Retirement and Pension Records
  • Investment Trade Confirmations
  • Income Tax Payment Checks
  • Important Correspondence
  • Legal Records
  • CPA Audit Reports