IRS Record Retention Guide
How long should you keep your tax records? Here are the IRS-recommended retention periods for individuals, businesses, and property owners.
Why Record Retention Matters
The IRS can audit your return and assess additional tax within a certain period after you file. Keeping the right records — and keeping them long enough — protects you if questions arise. The period of limitations is how long the IRS has to assess additional tax or you have to claim a refund or credit.
The rules below reflect current IRS guidance. When in doubt, keep records longer rather than shorter.
Individual Tax Returns
| Situation | Keep Records |
|---|---|
| You file a return and owe additional tax, with no special circumstances below | 3 years |
| You do not report income that you should, and it is more than 25% of the gross income shown on your return | 6 years |
| You file a fraudulent return | Indefinitely |
| You do not file a return | Indefinitely |
| You file a claim for credit or refund after you filed your return | 3 years from when you filed the original return, or 2 years from when you paid the tax — whichever is later |
| You file a claim for a loss from worthless securities or bad debt deduction | 7 years |
Employment Tax Records
If you have employees, keep all employment tax records for at least 4 years after the date the tax was due or paid, whichever is later. Records include:
- Your employer identification number (EIN)
- Amounts and dates of all wage, annuity, and pension payments
- Amounts of tips reported to you by employees
- Records of allocated tips
- Fair market value of in-kind wages paid
- Names, addresses, Social Security numbers, and occupations of employees
- Copies of employees' W-4 forms
- Dates of employment for each employee
- Periods for which employees and recipients were paid while absent due to sickness or injury
- Copies of returns filed, and confirmation numbers
- Dates and amounts of tax deposits made
Property Records
Keep records relating to property until the period of limitations expires for the year in which you dispose of the property. You need these records to figure the basis of the property for computing gain or loss when you sell or otherwise dispose of it.
| Property Type | What to Keep |
|---|---|
| Real estate (home, rental, land) | Purchase documents, closing statements, cost of improvements, depreciation claimed, selling price and expenses |
| Stocks and securities | Purchase confirmation, reinvested dividends, stock splits, sale confirmation |
| Inherited property | Appraisal or fair market value at date of death, estate tax return if filed |
| Gifted property | Donor's original cost basis, fair market value at time of gift, gift tax return if applicable |
Business Records
The IRS recommends the following retention periods for common business records. State and local requirements may be longer — consult your tax professional.
| Record Type | Recommended Retention |
|---|---|
| Accounts payable and receivable ledgers | 7 years |
| Bank statements and cancelled checks | 7 years |
| Business income tax returns | Permanently |
| Business licenses and permits | Permanently |
| Contracts and leases (active) | Life of contract + 7 years |
| Depreciation schedules | Life of asset + 7 years |
| Employee expense reports | 7 years |
| General ledgers and journals | Permanently |
| Invoices (customers and vendors) | 7 years |
| Payroll records and summaries | 7 years |
| Petty cash vouchers | 3 years |
Personal Financial Documents
| Document | Recommended Retention |
|---|---|
| Tax returns (federal and state) | Permanently |
| W-2s, 1099s, and supporting documents | 7 years |
| IRA contribution records | Permanently |
| Social Security statements | Permanently |
| Birth, marriage, and divorce certificates | Permanently |
| Wills, trusts, and powers of attorney | Permanently |
| Credit card statements (with deductible charges) | 7 years |
| Medical bills and insurance statements | 5 years |
| Utility bills (if used for deduction) | 3 years |
| Pay stubs (until reconciled with W-2) | 1 year |
Disposing of Records Safely
Once a record is past its retention period, dispose of it securely to protect against identity theft:
- Shred any paper records that contain your name, Social Security number, account numbers, or financial data.
- Permanently delete or wipe digital files — emptying the trash alone is not sufficient for sensitive data.
- Never put financial documents in the recycling bin or trash without shredding.
This guide is provided for general information only. Record-keeping requirements can vary based on your specific situation. Contact Heath Income Tax if you have questions about what to keep and for how long.
Have Questions About Your Records?
Our team can advise you on what to keep, what you can safely discard, and how to organize your files for tax season.