Record Keeping Compliance
Tax Record Retention Guide
Learn how long to keep tax returns, receipts, business records, property documents, and other important financial records.
Who It's For
Individuals, households & small businesses
What You'll Find
IRS record keeping rules & best practices
Quick Access
Tax record timelines & document guidance
Why Record Retention Matters
A record retention guide helps you determine how long tax, financial, business, and supporting documents should be kept before they are safely discarded.
Keeping good records is important for more than preparing a tax return. Your documents may be needed to:
Support income, deductions or credits reported on a return
Respond to an IRS inquiry or examination
Prepare an amended return
Verify the cost or tax basis of property
Document business expenses
Support insurance or loan applications
Prepare future tax returns
Resolve questions involving payroll, investments or financial transactions
The commonly referenced “three-year rule” is a useful starting point, but it does not apply to every situation. The IRS generally requires records to be retained for as long as they may be needed to administer the tax laws, and some circumstances require records to be kept considerably longer.
A good rule of thumb: Before destroying a financial document, make sure it is no longer needed for tax, legal, insurance, banking, property, or other business purposes.
How Long Should You Keep Tax Records?
For most taxpayers, records supporting income, deductions, and credits should generally be kept for at least three years after the return is filed.
Examples may include:
W-2 and 1099 forms
Receipts supporting deductions
Charitable contribution records
Education tax documents
Health-related tax records
Bank records related to taxable transactions
Documentation supporting credits claimed
Copies of correspondence relating to the return
The IRS also recommends keeping copies of filed tax returns because they can help when preparing future returns or amendments.
6 Years — Significant Unreported Income
Keep records for six years if income that should have been reported was omitted and the amount is more than 25% of the gross income shown on the return.
7 Years — Certain Loss Claims
Keep applicable records for seven years if you file a claim involving a loss from worthless securities or a bad-debt deduction.
Indefinitely — Certain Filing Situations
The IRS advises keeping records indefinitely when:
No tax return was filed, or
A fraudulent return was filed.
Employment Tax Records: At Least 4 Years
Businesses with employees should generally keep employment tax records for at least four years after the tax becomes due or is paid, whichever is later. These records can include payroll information, employee information, withholding forms, tax deposits, filed employment tax returns and related documentation.
For Business Records: What Should You Keep?
Good business records should clearly document where money came from, where it went, and how amounts reported on tax returns were determined.
The IRS does not require one particular bookkeeping system for most businesses, but the records must accurately show income and expenses and substantiate items reported on the return.
Income & Sales Records
Consider retaining:
Sales invoices
Cash register records
Deposit records
Payment processor statements
Forms 1099
Customer invoices
Other documents showing the source of business income
Expense & Purchase Records
Useful supporting documents may include:
Vendor invoices
Receipts
Paid bills
Canceled checks or other proof of payment
Credit-card statements
Purchase documentation
Travel and transportation records
The IRS specifically notes that supporting documents such as invoices, receipts, deposit slips and proof of payment can substantiate business transactions.
Payroll & Employee Records
Businesses should maintain appropriate records relating to:
Employee wages
Payroll taxes
Federal tax withholding
Forms W-4
Forms W-2
Tax deposits
Employment dates
Fringe benefits
Expense reimbursements
Employment tax records generally require at least a four-year retention period, although certain specialized records can require longer.
Property & Asset Records
Do not automatically discard records relating to property after three years.
Keep documents that establish:
Purchase price
Date acquired
Improvements
Depreciation
Section 179 deductions
Casualty losses
Sale price
Selling expenses
Property records generally need to be maintained until the period of limitations expires for the tax year in which the property is sold or otherwise disposed of.
Records You May Want to Keep Long-Term
Some records are worth retaining for many years—or indefinitely—even when a specific IRS tax-retention period has expired.
Consider Long-Term Retention For:
Copies of filed tax returns
Property deeds and closing documents
Records establishing the basis of real estate or investments
Major property improvement records
Current contracts and leases
Corporate formation documents
Articles of incorporation
Business bylaws and ownership records
Year-end financial statements
Depreciation schedules
Retirement and pension records
Important insurance documents
Investment purchase records
Legal documents
Estate-planning documents
Records of significant tax payments
Trademark or patent documentation
These documents can be useful for reasons unrelated to an IRS audit, including property sales, financing, insurance claims, estate administration, legal matters, and establishing ownership or cost basis.
The IRS specifically advises taxpayers not to discard records simply because they are no longer needed for federal tax purposes without first determining whether an insurance company, creditor, or another organization may require them longer.
Personal Financial Records
For individuals, not every monthly statement needs to remain in a file cabinet forever.
For example, once you receive and verify a complete year-end investment or retirement statement, you may not need every routine monthly statement—unless an individual statement documents something important that is not reflected elsewhere.
Records tied to the purchase or sale of investments, real estate, major improvements, retirement contributions, or other transactions affecting tax basis should generally be retained longer.
Paper or Digital?
Tax records do not necessarily have to take up boxes of physical storage.
A practical digital recordkeeping system can include:
A folder for each tax year
Separate folders for income, expenses and deductions
Scanned receipts
PDF bank and investment statements
Copies of filed returns
Backup copies stored securely
For businesses, electronic accounting records are still subject to recordkeeping requirements just like paper records.
Need Help Deciding What Records to Keep?
Record-retention needs can vary depending on the type of document and your individual or business tax situation. Get professional guidance before permanently discarding important tax or financial records.
