April 15 has come and gone and another
year of tax forms and shoeboxes full of receipts is behind us.
But what should be done with those documents after your check
or refund request is in the mail?
Federal law requires you to maintain
copies of your tax returns and supporting documents for three
years. This is called the "three-year law" and leads many
people to believe they're safe provided they retain their
documents for this period of time.
However, if the IRS believes you have
significantly underreported your income (by 25 percent or
more), or believes there may be indication of fraud, it may go
back six years in an audit. To be safe, use the following
guidelines.
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Caution: Identity
theft is a serious threat in today's world, and it is
important to take every precaution to avoid it. After it
is no longer necessary to retain your tax records,
financial statements, or any other documents with your
personal information, you must dispose of these records
by shredding them and not disposing of them by merely
throwing them away in the trash.
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Business Document 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
- Bank Statements and
Reconciliation's
- 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
- 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
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
- 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 Document To
Keep For One Year
- While it's important to keep year-end
mutual fund and IRA contribution statements forever, you
don't have to save monthly and quarterly statements once the
year-end statement has arrived.
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)
- Property Records / Improvement
Receipts
- 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
- Investment Trade Confirmations
- Retirement and Pension
Records
Special
Circumstances
