Like so many of us, you probably have a filing cabinet full of papers from years past or files in your computer that you have been saving “just in case” you need them some day. While there are some records that are important and do need to be kept permanently, that is a relatively short list. To help you retain important documents and eliminate those that aren’t needed, we’ve gathered a handy list of what you need to keep, and for how long. With so many things stored in “the cloud” these days, it is necessary to have printed copies of important documents in case you temporarily lose access to online items. It is also equally important to protect yourself and your personal information or that of your employees/clients by shredding or safely and permanently deleting documents that have a shelf-life.
|Charitable contribution documentation||Seven years|
|Credit card statements||Seven years|
|Estate planning documents||Permanent|
|Home improvement receipts||During ownership plus another seven years|
|Home purchase documents||During ownership plus another seven years|
|Income tax returns and all supporting documents||Seven years|
|Insurance policies||For the life of the policy plus another three years|
|Loan documents||For the life of the policy plus another seven years|
|Retirement plan annual reports||Permanent|
The IRS has provided the following time limitations for income tax returns:
- Keep records for three years if situations (4) and (5) below do not apply to you.
- Keep records for three years from the date you filed your original return or two years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
- Keep records for seven years if you file a claim for a loss from worthless securities or bad debt deduction.
- Keep records for six years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
- Keep records indefinitely if you do not file a return.
- Keep employment tax records for at least four years after the date that the tax becomes due or is paid, whichever is later.
The IRS recommends keeping records relating to property until the period of limitations expires for the year in which you dispose of the property. You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.
If you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property.
|Accounts payable||Seven years|
|Accounts receivable||Seven years|
|Chart of accounts||Permanent|
|Expense records||Seven years|
|Financial statements (annual)||Permanent|
|Fixed asset purchases||Permanent|
|Inventory records||Seven years (permanent for LIFO system)|
|Loan payment schedules||Seven years|
|Purchase orders||Seven years|
|Sales records||Seven years|
|Bank reconciliations||Two years|
|Bank statements||Two years|
|Cancelled checks||Seven years (permanent for real estate)|
|Electronic payment records||Seven years|
|Articles of incorporation||Permanent|
|Contracts – major||Permanent|
|Contracts – minor||Life of contract plus four years|
|Insurance policies||Life of policy plus three years (check with insurance agent)|
|Accident reports||Seven years|
|Employment applications||Three years|
|Employee files (ex-employees)||Seven years (or state statute of limitations for employee lawsuits)|
|Employee taxes||Seven years|
|Payroll records||Seven years|
|Worker Compensation Reports||10 years|
Real Property Records
|Equipment Leases||Five years|
|Leases payment records||Life of lease plus four years|
|Real estate purchases||Permanent|
Please note that this is by no means an all-inclusive list, nor is it permanent. Policies and advice change over time, and this is just a general guide.