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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:
Financial Items
7 Years
Cancelled or Substitute Checks, Credit Card Receipts, Paid Invoices, Bank Deposit Slips, Bank Statements, Tax Returns, Employment Tax Returns, Expense Records, Financial Statements, Contracts and Meeting Minutes.
Corporate Stock Records
Permanent
Employee Records
Period of Employment plus 7 Years
Depreciation Schedules
Life of Assets plus 7 Years
Real Estate Records
Ownership Period plus 7 Years
Journal & General Ledge
Life of Business plus 7 Years
Inventory Records
7 Years
Investment Records
Ownership Period plus 7 Years
Home Purchase and Improvement Records
Ownership Period plus 7 Years
Note: Computer-Maintained Records are the same as manually kept records.
