Individuals are never sure how long to keep various tax records that include tax returns, statements and receipts. Sometimes it is difficult to know whether basic guidelines for retention are appropriate or fit all cases.
The following represent general guidelines.
Records and Documentation That Should be Retained for 3 Years: In most cases, keep records that support items on your tax return for at least three years after that tax return has been filed. Examples include:
Records to Be Kept Seven Years
Records and Documentation That Should Be Retained Indefinitely
Although the IRS generally does not require you to keep your records in any special manner, having a designated place for tax documents and receipts is a good idea. It will make preparing your return easier, and it may also remind you of relevant transactions.
Good record-keeping will also help you prepare a response if you receive an IRS notice or need to substantiate items on your return if you are selected for an audit.
When in doubt, the prudent course of action is to preserve the records or documentation indefinitely. Additionally, documents should be scanned into a computer into your current “cloud” storage for safekeeping and backup. In some cases a discussion with your tax attorney or tax accountant may be warranted and necessary before disposing or destroying documents.
When your records are no longer needed for tax purposes, think twice before discarding them. They may still be needed for other non-tax purposes. Besides the wealth of information good records provide for business planning purposes, insurance companies and/or creditors may have different record retention requirements than the IRS.
Finally, with the ability to scan documents onto the computer, from an ultra-conservative perspective, it may be better and most prudent to simply scan these documents to preserve them in the event they are needed later. This will provide additional protection if the paper documentation is lost or destroyed.
For record retention guidelines for businesses please read Record Retention Guidance For Business
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From their offices in Philadelphia, PA, the law firm of Steven J. Fromm & Associates, P.C. provides a full range of estate planning, probate and estate administration, tax, business and corporate legal services to clients throughout eastern Pennsylvania and the Delaware Valley, the Lehigh Valley Area, the Five-County Area, Bucks County, Delaware County, Montgomery County, Chester County, Philadelphia County, Berks County, Lehigh County, Lancaster County, York County, Harrisburg, Norristown, Doylestown, Media, West Chester, Allentown, Lancaster, and Reading.