As another tax season has come and gone, we’re left with another year of tax forms and boxes full of receipts. During your spring cleaning you may find yourself wondering which documents are important and necessary to keep, and which can be thrown away.
Federal law requires taxpayers to save copies of tax returns and the information and receipts used to support returns for three years. However, if the IRS has reason to believe an error may have occured on a tax return, they may look back six years.
The following are guidelines you may use whether you’re keeping business or personal records.
Business Documents To Keep For 1 Year
- Correspondence with customers and vendors
- Duplicate orders (other than purchasing department copy)
- Receiving sheets
- Requisitions
- Stenographer’s notebooks
- Stockroom withdrawal forms
Business Documents To Keep For 3 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
Business Documents To Keep For 6 Years
- Accident reports, claims
- Accounts payable 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
Business Documents To Keep Forever
- Audit reports from CPA's/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 Documents To Keep For 1 Year
- It is 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 3 Years
- Credit card statements
- Medical bills (in case of insurance disputes)
- Utility records
- Expired insurance policies
Personal Documents To Keep For 6 Years
- Supporting documents for tax returns
- Accident reports and claims
- Medical bills (if tax-related)
- Sales receipts
- Wage garnishments
- Other tax-related bills
Personal Documents To Keep Forever
- CPA audit reports
- Legal records
- Important correspondence
- Income tax returns
- Income tax payment checks
- Property records / improvement receipts (or six years after property sold)
- Investment trade confirmations
- Retirement and pension records
Special Circumstances
- Car records (keep until the car is sold)
- Credit card receipts (keep until verified on your statements)
- 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)
- Sales receipts (keep for life of the warranty)
- Stock and bond records (keep for six years beyond the agreement)
- 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 three years after the tax life on the asset)