Kelly Boswell
Kelly Boswell
Kelly Boswell
Kelly Boswell
Kelly Boswell
How Long Should You Keep Those Old Tax Returns?

How Long Should You Keep Those Old Tax Returns?

It’s January! One of my first new year tasks each year is to clean out my files and one of my New Year’s resolutions every year is to be more organized for the coming year. Easier said than done, right? Inevitably, I find myself needing something I’ve shredded already and at the end of the year I have a pile of unneeded papers to be shredded.

We have rules for cleaning out closets – we ask, “When did I last wear this?”  We have rules for decluttering the rest of the house – we ask, “Does this bring me joy?”  So, what are the rules for cleaning out your files? How long are you supposed to keep documents? How long should you keep those old tax returns? These are questions we are asked all the time, so we are happy to provide some guidelines.

You should keep records documenting amounts of income, deduction, or credit on your tax return until the period of limitations runs out. For most, this period is three years, but if you file a claim for a loss from worthless securities or bad debt deduction then you should keep the records for seven years. If you have not reported or under reported income by more than 25%, you should keep records for six years. If you do not file a tax return, then you should keep records indefinitely because the limitation period does not start until the return is filed. There are many experts that suggest keeping your tax returns indefinitely in case you ever need to prove a return was filed.

If the records are connected to property, then you should keep the records until the period of limitations for the year in which you disposed of the property has expired.

The IRS defines the Period of Limitations as follows (

Period of Limitations that apply to income tax returns

  1. Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
  2. Keep records for 3 years from the date you filed your original return or 2 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.
  3. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
  4. Keep records for 6 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.
  5. Keep records indefinitely if you do not file a return.
  6. Keep records indefinitely if you file a fraudulent return.
  7. Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

Records that need to be retained permanently by businesses are: ownership records, business formation documents, annual meeting minutes, by-laws, stock ledges, and property deeds.

The following charts are to be used as a guide. You should consult with your attorney and/or insurance carrier when establishing a record retention policy.

Individual Records Retention Period

Cancelled Checks3 Years
Bank Deposit Slips3 Years
Bank Statements6 Years
Investment Account Statements:
Non-Retirement3 Years After Sale
Retirement3 Years After the Sale, Rollover, or Distribution
Supporting Documents for Tax Returns7 Years
Tax ReturnsPermanently
Real Estate RecordsPermanently
Expense Reports3 Years
Divorce Decrees and Dependent AgreementsPermanently

Business Record Retention Period

Accident Reports / Claims (Settled Cases)7 Years
Accounts Payable Ledgers and Schedules7 Years
Accounts Receivable Ledgers and Schedules8 Years
Audit ReportsPermanently
Bank Statements3 Years
Capital Stock and Bond Records:
Ledgers, Transfer Registers, Stubs Showing Issues, Records of Interest Coupons, etc.Permanently
Charts of AccountsPermanently
Checks (Cancelled Checks for Important Payments, Special Contracts, Purchase of Assets, Payment of Taxes)Permanently
Checks (Cancelled Except Those Noted Above)7 Years
Contracts and Leases (Expired)7 Years
Contracts and Leases Still in EffectPermanently
Correspondence, General and Schedules2 Years
Correspondence, legal and Important LettersPermanently
Correspondence, Routine with Customers / Vendors2 Years
Deeds, Mortgages and Bills of SalePermanently
Depreciation SchedulesPermanently
Employee Personal Records (After Termination)7 Years
Employment Applications3 Years
Financial Statements (Year-End)Permanently
General ledgers, Year-end Trial BalancesPermanently
Insurance Records, Policies etc.Permanently
Internal Audit Reports (MISC)3 Years
Inventory Records7 Years
Invoices to Customers or from Vendors7 Years
IRA and Keogh Plan Contributions, Rollovers, Transfers and DistributionPermanently
Minute Books of Directors, Stockholders, Bylaws and CharterPermanently
Payroll Records, Summaries and Tax Returns7 Years
Petty Cash Vouchers3 Years
Property Records, Including Costs, Depreciation Reserves, Year-End Trial Balances, Depreciation Schedules Blueprints and Plans,Permanently
Purchase Orders3 Years
Receiving Sheets1 Year
Safety Records6 Years
Sales Records7 Years
Stock and Bond Certificates (Cancelled)7 Years
Subsidiary Ledgers7 Years
Tax Returns, Revenue Agents’ Reports and Other Documents Relating to Determination of Income Tax LiabilityPermanently
Timecards of Daily Reports7 Years
Trademark Registrations, Patents, ad CopyrightsPermanently
Voucher Register and Schedules7 Years
Vouchers for Payments to Vendors, Employees etc. (Includes Allowances & Reimbursements of Employees, Officer etc. for Travel and Entertainment Expenses)7 Years
W-2 Forms7 Years

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