06/29/2019
2019 RETENTION GUIDE
Storing your tax records: How long is long enough?
Once again, April 15 has come and gone and left another years’ worth of tax forms and a shoe-box full of receipts. What you really want to know is what should you do with these documents one the payment or refund request is submitted?
According to Federal law, you are required to maintain copies of your tax returns and supporting documentation for three years. This "three-year law" tends to lead many people into believing they're safe, provided their documents are retained for the stated period of time.
However, if the IRS believes you have significantly under-reported your income (by 25% or more), they may perform audits going back over six years. Additionally, if return present any indications of fraud, or failure to file a return, then no IRS limitation exists. Considering the aforementioned circumstances, taxpayers should consider using the following as record retention guidelines.
Business Records - Keep... Individual Records - Keep...
1 Year 1 Year
3 Years 3 Years
6 Years 6 Years
Forever Forever
Special Circumstances
Business Documents - Keep For 1 Year
• Correspondence with Customers and Vendors
• Duplicate Deposit Slips
• Purchase Orders (other than Purchasing Department copy)
• Receiving Sheets
• Requisitions
• Journal entry Notebooks
• Stockroom Withdrawal Forms
Business Documents - Keep For 3 Years
• Employee Personnel Records (after termination)
• Employment Applications
• Time Cards For Hourly Employees
• Savings Bond Registration Records of Employees
• Expired Insurance Policies
• General Correspondence
• Internal Audit Reports
• Internal Reports
• Petty Cash Vouchers
• Physical Inventory Tags
Business Documents - Keep For 6 Years
• Accident Reports, Claims
• Accounts Payable Ledgers and Schedules
• Accounts Receivable 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
• Records related to net operating losses (NOL's)
• Sales Records
• Subsidiary Ledgers
• Time Books
• Travel and Entertainment Records
• Vouchers for Payments to Vendors, Employees, etc.
• Voucher Register, Schedules
Business Records - Keep Forever
While federal guidelines do not require you to keep tax records "forever," you may have various reasons to maintain the following document indefinitely.
• Audit Reports from CPAs/Accountants
• Cancelled Checks for Important Payments (tax- payments, large purchases etc)
• Cash Receipts 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 Agent Reports
• Journals
• Legal Records, Correspondence and Other Important Matters
• Minutes Books of Directors and Stockholders
• Mortgages, Bills of Sale
• Property Appraisals - Independent Appraisers
• Property Records
• Retirement and Pension Records
• Tax Returns and Worksheets
• Trademark & Patent Registrations
Individual Tax Documents - Keep For 1 Year
It’s important to keep year-end mutual fund and IRA contribution statements indefinitely, and not the monthly and quarterly statements once year-end statements arrive.
Individual Tax Documents - Keep For 3 Years
• Credit Card Statements
• Medical Bills (for insurance disputes)
• Utility Records
• Expired Insurance Policies
Individual Tax Documents - Keep For 6 Years
• All Supporting Documents For Tax Returns
• Accident Reports and Claims
• Pre-Tax Medical Bills
• Sales Receipts
• Wage Garnishments
• Other Tax-Related Bills
Individual Tax Records - 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 (Forms 5448, 1099-R & 8606 until all distributions are made from your IRA or other qualified plan)
Special Circumstances
• Vehicle Records (keep until the car is sold)
• Credit Card Receipts (until verified against your statement)
• Insurance Policies (keep for the life of the policy)
• Mortgages / Deeds / Leases (always keep 6 years beyond the agreement)
• Pay Stubs (until reconciled against W-2s)
• Sales Receipts (keep during life of the warranty)
• Stock and Bond Records (keep for 6 years after sales)
• Warranties and Instructions (keep for the life of the product)
• Other Bills (keep until payment verified on the next bill)
• Depreciation Schedules and Other Capital Asset Records (keep 3 years after the tax life of asset)
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