Federal tax laws require taxpayers to maintain books of account or records to support amounts reported on tax returns. The general rule is that such books and records must be kept as long as they may be relevant to a taxpayer’s claim for a tax credit or refund or to an IRS attempt to assess additional tax for the year in question.
The specific rules relating to the length of time such books and records must be kept are quite detailed. However, the following retention periods should be used as general guidelines.
Forever
- Copies of tax returns
- Tax / legal correspondence
- Audit reports
- General ledger and journals
- Financial statements
- Contracts and leases
- Real estate records
- Corporate stock records
- Records relating to a home purchase or sale
- IRA records
6 Years*
- Bank statements / deposit slips
- Sales records and journals
- Other records relating to revenue
- Employee expense reports and records relating to travel and entertainment
At least 4 years*
- Employment tax records
- Gross receipts: Cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099-MISC
- Proof of purchases: Canceled checks, cash register tape receipts, credit card sales slips and invoices
- Expense documents: Canceled checks, cash register tapes, account statements, credit card sales slips, invoices and petty cash slips for small cash payments
- Documents to verify your assets: Purchase and sales invoices, real estate closing statements and canceled checks
- Inventory records**
Life of asset in question “plus” three more years
- Depreciation schedules
- Other capital assets
- A home purchase or improvement
- Stocks and other investments
- IRA transactions
- Rental property records
Individual taxpayer items supporting their tax returns for at least 3 years:
- Bills
- Credit card and other receipts
- Invoices
- Mileage logs
- Canceled, imaged or substitute checks or any other proof of payment
- Any other records to support deductions or credits you claim on your return
* From the later of the tax return due date or filing date. (All records related to a return should be kept for at least six years if there is any concern the IRS could show a significant understatement of gross income on the return.)
** Longer if you use LIFO.
*** Some should be kept longer; e.g. checks for tax payments should be kept with the tax returns, checks for asset acquisitions should be kept with bill of sale, etc.
Visit Recordkeeping section on IRS website.
