Records the IRS says to keep -- and for how long
By Kay Bell • Bankrate.com

Basic records are documents that everybody should keep. Although the Internal Revenue Service doesn't require you to keep your records in a particular way, it does urge taxpayers to keep them "in an orderly fashion" and in a safe place.

Basic records - For Individuals

FOR items concerning your ...	KEEP as basic records ...
Income	Form(s) W-2 Form(s) 1099 Bank statements Brokerage statements Form(s) K-1
Expenses	Sales slips Invoices Receipts Canceled checks or other proof of payment
Home	Closing statements Purchase and sales invoices Proof of payment Insurance records Form 2119 (if you sold a home before 1998)
Investments	Brokerage statements Mutual fund statements Form(s) 1099 Form(s) 2439

Also

How long you should hang on to
IF you ...	THEN the period is ...
Owe additional tax and situations 2, 3 and 4 (below) do not apply to you	3 years
Do not report income that you should and it is more than 25 percent of the gross income shown on your return	6 years
File a fraudulent return	No limit
Do not file a return	No limit
File a claim for credit or refund after you filed your return	Later of 3 years or 2 years after tax was paid
File a claim for a loss from worthless securities	7 years

Keep in mind that while the basic IRS review period is three years, there are exceptions -- in the tax collector's favor.

If the agency suspects you've underreported your income or has questions about a worthless stock write-off, look out. When examiners believe you've shorted your income amount on a return by 25 percent or more, they can come asking questions up to six years later. Add another 12 months for queries about that bad investment.

More details on tax record keeping are available in IRS Publication 552, Recordkeeping for Individuals.

Records Retention List

To guide you in minimizing your risks, here's a list of generally accepted, reasonable time periods recommended for retaining business records which you may print out for future reference:

Accident reports and claims (settled cases)-- 7 years

Accounts payable ledgers and schedules-- 7 years

Accounts receivable ledgers and schedules-- 7 years

Audit reports of accountants--  Indefinitely

Bank reconciliations-- 1 year

Bank statements-- 7 years

Cash books--  Indefinitely

Charts of accounts--  Indefinitely

Checks (canceled, see exceptions below)--  7 years

Checks (canceled for important payments, i.e., taxes, purchases of property, special contracts, etc)-- Indefinitely

Construction documents--  Indefinitely

Contracts and leases (expired)--  7 years

Contracts and leases still in effect--  Expiration + 7 years

Correspondence (general)--  3 years

Correspondence (important)--  Indefinitely

Deeds, mortgages, bills of sale, titles--  Indefinitely

Depreciation schedules--  Indefinitely

Duplicate deposit slips--  1 year

Electronic fund transfer documents--  7 years

Employee personnel records (after termination)--  7 years

Employee W-4 forms--   4 years

Employment applications-- 3 years

Expense analyses and expense distribution schedules--  7 years

Financial statements (end-of-year, other months optional)--   Indefinitely

General and private ledgers (and end-of-year trial balance)--  Indefinitely

I-9’s--   (after termination) 3 yrs after hire or 1 year after termination, whichever is later

Insurance policies (expired)--  3 years

Inventories of products, materials, supplies--  7 years

Invoices to customers--  7 years

Invoices from vendors--  7 years

Journals--  Indefinitely

Leases see Contracts

Licenses--  Indefinitely

Loan documents, notes--   Indefinitely

Minute books of directors and stockholders, including bylaws and charter--  Indefinitely

Notes receivable ledgers and schedules--   7 years

OSHA logs--  5 years

Payroll records and summaries, pensions, payroll taxes--   7 years

Petty cash vouchers--  3 years

Property appraisals by outside appraisers--  Indefinitely

Property records including costs, depreciation reserves, end-of-year trial balances, depreciation schedules, blueprints and plans--    Indefinitely

Purchase orders (purchasing department copy)--   7 years

Receiving sheets--  1 year

Sales records--  7 years

Scrap and salvage records (inventories, sales, etc.)--  7 years

Subsidiary ledgers--  7 years

Tax returns and worksheets, agents' reports, any documents relating to income tax liability--  Indefinitely

Time books/cards--  7 years

Trade mark registrations--   Indefinitely

Voucher register and schedules--  7 years

Vouchers for payments to vendors, employees, etc. (including allowances and reimbursement of employees officers, etc., for travel and entertainment expenses)--   7 years

W-4 forms--   4 years

Workmans' comp. documents--  11 years

 

Remember that these are just guidelines. Apply them reasonably to minimize the risks in your individual circumstances. 
Courtesy of Ask Alice-Business Owner’s Toolkit.

 

Links and/or guidance listed at www.visionquestmt.com; or provided to you by VisionQuest Business Mgmt., is not intended as legal or accounting advice, hence you should always consult a tax and/or legal professional with any specific questions you may have.

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