Dunlap Tax Service

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Chart: What records to keep, how long to keep them

Document
How long to keep it
Why
Tax returns and supporting documents
A minimum of seven years after the return is filed.
The IRS has three years to audit your return if it suspects good-faith errors, six years if it believes you underreported your income by at least 25 percent and an unlimited time if it is investigating fraud. At a minimum, hold on to your W-2s until you begin earning Social Security since they offer the best estimate of your earnings.
Brokerage statements / investment records
Keep monthly statements for one year; you can dump them if your annual statement summarizes all activity. Keep the yearly summaries as long as you own the security, plus seven years.
You need proof of your purchases to prove capital gains and losses on your tax return.
Retirement plan statements
Keep quarterly statements for one year; dump them once you match the figures with your annual statement. Keep the annual summaries until you retire.
Records of your contributions to your Roth IRA prove that you already paid the tax on it.
Home improvement and other real estate records
Until you sell the home, plus seven years.
They establish your cost basis in the home and could help lower your capital gains tax on the property.
Credit card statements
One month
Toss once you check them for accuracy, unless they’re your only record of a tax-related transaction.
Pay stubs
One year
Shred once you get your W-2 and you make sure the numbers match.
Bank statements
Keep monthly statements for one year. Keep annual statements related to your taxes for at least seven years.
They provide proof of income from interest-bearing accounts and can be a record of tax-related transactions.
Utility and phone bills
One month
Keep until you get the next statement showing that you paid, unless you need it for tax purposes.
Receipts
One month, for purchases such as groceries and restaurant meals, until you match them with your credit card or bank statement. For expensive purchases (jewelry, furniture, appliances), staple the receipt to the owner’s manual and keep it as long as you own the item.
Receipts for big-ticket items are necessary to activate the warranty or replace a defective item and can prove an item’s value to an insurance company.

Period of Limitations that apply to income tax returns
Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
Keep records indefinitely if you do not file a return.
Keep records indefinitely if you file a fraudulent return.
Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
The following questions should be applied to each record as you decide whether to keep a document or throw it away.

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