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Document Retention 

Federal law requires you to maintain your tax return copies and supporting documents for 3 years, known as the "three year law."

If the IRS believes you have under-reported your income by 25% or more, or suspect fraud, they can go back 6 years in an audit.

 

To be safe, follow these guidelines:

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  • Create a Backup Set of Records and Store Them Electronically. Keeping a backup set of records -- including, for example, bank statements, tax returns, insurance policies, is easier than ever now that financial institutions provide statements and documents electronically, and financial information is available online.

  • Even if the original records are only on paper, they can be scanned and converted to a digital format.

  • Once the documents are in electronic form, taxpayers can download them to a backup storage device, such as an external hard drive.

  • Online backup, is really the only way to be sure your data is fully protected and remains safe in the event of a natural disaster or personal emergency.

French Lawyer

Personal Documents - 1 YEAR

  • Bank Statements

  • Paycheck Stubs (reconcile with W-2)

  • Canceled checks

  • Monthly and quarterly mutual fund and retirement contribution statements (reconcile with year end statement)

Image by Jan Böttinger

Personal Documents - 3 Years

  • Credit Card Statements

  • Medical Bills (in case of insurance disputes) 

  • Utility Records

  • Expired Insurance Policies 

File Folders

Personal Documents - 6 Years

  • Supporting Documents For Tax Returns

  • Accident Reports and Claims

  • Medical Bills (if tax-related)

  • Property Records / Improvement Receipts

  • Sales Receipts

  • Wage Garnishments

  • Other Tax-Related Bills

Organized Files

Personal Documents - Forever

  • Audit Reports

  • Legal Records

  • Important Correspondence

  • Income Tax Returns

  • Income Tax Payment Checks

  • Investment Trade Confirmations

  • Retirement and Pension Records

Image by Beatriz Pérez Moya

Business Documents - 1 Year

  • Correspondence with Customers and Vendors

  • Duplicate Deposit Slips

  • Purchase Orders (other than Purchasing Department copy)

  • Receiving Sheets

  • Requisitions

  • Stenographer's Notebooks

  • Stockroom Withdrawal Forms

Image by Bernd Klutsch

Business Documents - 3 Years

  • Employee Personnel Records (after termination)

  • Employment Applications

  • Expired Insurance Policies

  • General Correspondence

  • Internal Audit Reports

  • Internal Reports

  • Petty Cash Vouchers

  • Physical Inventory Tags

  • Savings Bond Registration Records of Employees

  • Time Cards For Hourly Employees

Keeping accounts

Business Documents - 6 Years

  • Employee Personnel Records (after termination)

  • Employment Applications

  • Expired Insurance Policies

  • General Correspondence

  • Internal Audit Reports

  • Internal Reports

  • Petty Cash Vouchers

  • Physical Inventory Tags

  • Savings Bond Registration Records of Employees

  • Time Cards For Hourly Employees

Image by Maarten van den Heuvel

Business Documents - Forever

  • Employee Personnel Records (after termination)

  • Employment Applications

  • Expired Insurance Policies

  • General Correspondence

  • Internal Audit Reports

  • Internal Reports

  • Petty Cash Vouchers

  • Physical Inventory Tags

  • Savings Bond Registration Records of Employees

  • Time Cards For Hourly Employees

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