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How long should you keep tax records?
by Tony Novak, CPA, MBA, MT April 29, 2015
As we shift to electronic record storage, the issue of required storage time of tax records has become less important since most people keep electronic records far longer than the required time for under tax law and related issues. Yet a significant portion of our business records still remain in paper format and retention and storage can be a significant concern.
To simplify the issue, I suggest that most physical records should be retained three years past the date of tax filing. Other types of tax records should be kept permanently. Please keep in mind that this is meant as practical advice, not legal advice. This does not pertain to any situation where criminal activity may be involved or suspected. There are rare other situations when it is useful to keep information longer. So where space and storage cost is not an issue, you might want to keep all records longer.
Keep these records for 3 years:
- Cancelled Checks
- Bank Deposit Slips
- Travel & Entertainment Reports
- Credit Card Receipts, StatementsJournals, Ledgers
- Employee Payroll Records
- Capital Expenditures/Improvements
- Security Sales and Purchase Records
- Closing Papers On Real Estate
- Bank StatementsW-2’s, 1099’s, 1098’s
- Proof of Tax Return Deductions
- Inventory Records
- Business Sales and Purchase Invoices
- Financial Statements
- Financial Contracts
- Insurance Policies
Keep these records permanently:
- Tax Returns
- Corporate Stock Records
- Retirement Account Information
- Minutes of Meetings
- Depreciation Schedules
See the artice “What is an Accountant’s Permanent File?” for more information on what information may be retained by your accountant.
Opinions expressed are the solely those of the author and do not represent the position of any other person, company or entity mentioned in the article. Information is from sources believed to be reliable but cannot be guaranteed. Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues or a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. Tony Novak operates as an independent adviser under the trademarks “Freedom Benefits“, “OnlineAdviser” and “OnlineNavigator” but is not a representative, agent, broker, producer or navigator for any securities broker dealer firm, federal or state health insurance marketplace or qualified health plan carrier. He has no financial position in any stocks mentioned. Novak does work as an accountant, agent, adviser, writer, consultant, marketer, reviewer, endorser, producer, lead generator or referrer to other companies including the companies listed in the articles on this web site.
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