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Retaining Records for Tax Purposes:

Just how long you should keep records is partly a matter of judgment and a combination of state and federal statutes of limitations. Federal returns can be audited for up to three years after filing (six years if underreported income is involved), so all records substantiating tax deductions should be kept at least that long.

Here are recommended retention periods for various records:

RecordRetaining Period
Bank deposit slips7 years
Cancelled Checks7 years
ContractsPermanent
Corporate stock recordsPermanent
Credit card receipts7 years
Depreciation schedulesLife of assets plus 7 years
Employee recordsPeriod of employment plus 7 years
Employment tax returns7 years
Entertainment records7 years
Expense records7 years
Financial StatementsPermanent
Home improvements recordsOwnership period plus 7 years
Insurance policies (expired)3 years
Insurance records, current, claims, policies, etc.Permanently
Inventory records7 years
Investment recordsOwnership period plus 7 years
Journal & general ledgerLife of business plus 7 years
Minutes of meetingsLife of company plus 7 years
Paid invoices7 years
Real estate recordsPermanent
Tax returns (uncomplicated)7 years
Tax returns (all others)7 years