Record & Document Retention How long is too long to keep your documents?   Are you wondering how long you should keep a tax return, banking statement or medical record? Or are you keeping every single bill, warranty document, insurance invoice and even the parking ticket that you received 15 years ago? If you answered "yes," you are not alone. We hear from numerous clients a year regarding this subject. Below are some recommendations on how long you should keep records and what documents you can shred today!   These recommendations on Document Retention are general guidelines.  They are NOT advice for any specific circumstance!  Please contact us for professional advice. Tax Returns and Backup Documentation: Whether for personal or business documents, the general rule is seven years. The IRS has 3 years to audit you from the date you file your taxes. In the event of an audit it is safe to have on hand all of the backup information that went into the preparation of your returns. If you would like to cut down on space and/or paper, try scanning your documents onto your computer. Scanning your documents not only reduces space, but it keeps your documents from fading or getting damaged.   Personal Health Records:  You should keep the following records indefinitely for yourself and your family: complete contact information of your personal physicians; your medical history; and your prescriptions and/or treatments prescribed.  Having this information easily accessible on your computer would cut down on time trying to find it when you really need it.    Medical Records: If you claim medical expenses on your tax return, it is recommended that you keep the records for seven (7) years from the end of the year in which they are claimed.   Life Insurance Policies: It is recommended that you keep life insurance policy information for the life of the policy plus three (3) years.   Medical Insurance: You should keep the following medical information for five years from the date the service was rendered: premium statements, doctor bills, copies of prescriptions, hospital bills, etc.   Home Insurance: The minimum time frame suggested is five years. However, if you think that you may have any issues in the future, go with the ten year rule.   Warranty Documents: If you sell or throw away an appliance, telephone, or anything else that had warranty documentation, dispose of the warranty at the date of expiration.   Home Repair Bills & Contracts: This is another great area where a scanner might save you some significant file room. Basically, you should keep these kinds of records for about ten years in case you need to prove something with regard to guarantees of workmanship, or if you have any inkling of potential litigation at some future date.   Pay Stubs:  Keep the year-long worth of stubs until you reach the year-end check of December 31st that recaps the entire 12 months worth of pay, social security, taxes, etc. Remember that the Social Security Administration has all of your employment history on file. Do not rely on the Social Security office to have accurate records though.  Review the statement that the Social Security administration sends you to make certain you are getting credit for all your contributions.     Bank Statements: Keep your bank statements for a three month period in case you need to apply for a mortgage. These days most people use online banking which provides 24 hour access to your bank account including your monthly statements.  If you do not have online banking, you can always go into your bank and request past statements.    Credit Card Statements: Credit card records reflect only a proof of charges and the credit card companies can always reproduce the reports if need be. Like bank statements, do not keep these for more than three months.    ATM Receipts: Keep ATM receipts until the transaction has been processed and shows on your bank statement. This receipt is proof that you deposited "x" amount of money into your account.  You can also use these receipts as a reminder to enter the deposit or withdrawal into your checkbook.  There is no use for these after the transaction has been documented.     Utility Bills: If you are writing off your utility bills for tax purposes, you may need to keep them as tax records. However, if you can't write them off, you can keep a minimal amount of bills (last 3 months). The utility companies can recreate the others for you if you need them. Three months allows you to establish residency for purposes of drivers licenses, voter registration, mortgage application, etc.   Mortgage Statements: It is recommended that you keep your mortgage statements for the ownership period of the mortgaged property plus seven years.   Mortgage Documents:  Most important documents are recorded in your county records. For example, if you use a commercial bank for your financing then they will record a mortgage on the property when you take out the loan. After you've paid off the mortgage they are obligated to record a satisfaction of mortgage. If you look at that document, you should see some recording marks along the side indicating the book and page in which it was recorded in the county records. To be safe, however, I'd hold onto that document for 10 years. If you are doing renovations, make sure you get the satisfaction of lien from the contractors doing the work. Keep that as long as you own the property. When you sell it, the lawyers will do a title search and the title insurance should take over after that.   In conclusion, when in doubt, go with the ten-year rule of thumb and you should be fine. Also, consider purchasing and using a paper shredder and scanner, these two items could save you time, space and hassles. Business Document Retention (by year): If you're involved with a business you must keep records. Keeping good records will help with the following: - Monitor the progress of your business - Prepare your financial statements - Identify source of receipts - Keep track of deductible expenses - Prepare your tax returns - Support items reported on tax returns How long should I keep the records? You must keep records that support an item of income or deduction on a return until the period of limitations runs out.  Two Years Bank Reconciliation Duplicate Deposit Slips Routine Correspondence Minimum Three Years Appliance & Car Warranties (keep until expired or appliance no longer works) Purchase Agreements Expired Insurance Policies Employee Applications Budgets Employee Records (after termination) Five Years Retention Bank deposit slips, reconciliations, statements Checks - canceled Contracts - purchase and sales Depreciation records Employee expense reports Financial statements -- interim Internal reports (Work orders, sales reports, production reports) Invoices - Sales and cash register receipts, merchandise purchases Inventory lists Invoices -- purchases (permanent assets) Payroll journal Petty cash vouchers Time cards and daily time reports Sales Commission Report Settled insurance claims Payroll tax returns Seven Years Retention Federal Tax Returns State & Local Tax Returns Items to Support Tax Returns Vendor Contracts W-2 forms Mortgage Records Leases (expired) Personal Bank Statements Property Damage Reports Fire inspection reports Accident reports   Permanent Articles of incorporation Bylaws Capital stock and bond records Contracts and agreements (government construction, partnership, employment, labor, etc.) Copyrights and trademark registration Legal correspondence Actuarial reports Associated ledgers and journals Financial statements Minutes Patents Mortgages and note agreements Pension/profit-sharing informational returns Tax returns and canceled checks (federal, state and local) Financial statements IRS approval letter Plan and trust agreement Auditors' reports Sales and use tax returns If you would like more information regarding your specific situation please call our office at (301) 438-0510 or visit the IRS website: http://www.irs.gov/pub/irs-pdf/p552.pdf for general retention questions.