Resources & Tools
Record Retention
Retaining and storing your income tax records is an important final step of your tax filing responsibility.
When determining how long to keep most of your income tax records, we look at the time frame over which the IRS can audit a return. For most taxpayers, this period is three years from the original due date of the return. For example, if you file your 2014 Form 1040 on or before April 15, 2015, the IRS has until April 15, 2018 to audit the return. However, if income is under reported by more than 25%, the Statute of Limitations is extended to six years.
A good rule of thumb for keeping tax records is to add a year to the IRS Statute of Limitations period. Using this approach, you should keep your income tax records for a minimum of four years, but it may be more prudent to retain them for seven years, which is what the IRS informally recommends.
Here are recommended retention periods for various records:
| Records |
Retention Period |
| Cancelled checks |
7 years |
| Credit card receipts |
7 years |
| Paid invoices |
7 years |
| Bank deposit slips |
7 years |
| Bank statements |
7 years |
| Tax returns (uncomplicated) |
7 years |
| Tax returns (all others) |
Permanent |
| Employment tax returns |
7 years |
| Expense records |
7 years |
| Financial statements |
Permanent |
| Minutes of meetings |
Life of company plus 7 years |
| Corporate stock records |
Permanent |
| Employee records |
Period of employment plus 7 years |
| Depreaciation schedules |
Life of assets plus 7 years |
| Real estate records |
Ownership period plus 7 years |
| Journal & general ledger |
Life of business plus 7 years |
| Inventory records |
7 years |
| Home purchase & improvement records |
Ownership period plus 7 years |
| Investment records |
Ownership period plus 7 years |