Federal law requires you to maintain copies of your tax returns and supporting documents for three years. However, if the IRS believes you have significantly underreported your income, or believes there may be indication of fraud, it may go back six years in an audit. To be safe, use the following guidlines:

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Business records to keep for one year

• Purchase orders (except purchasing department copy)

• Receiving sheets
• Requisitions
• Stockroom withdrawal forms

Business records to keep three years

• Bank reconciliations
• Bank statements
• Correspondence (general)
• Correspondence (routine) with customers and/or vendors
• Duplicate deposit slips
• Petty cash vouchers
• Sales commission reports

Business records to keep seven years

• Accounts payable ledgers and schedules
• Accounts receivable ledgers and schedules
• Checks (canceled-see exception in permanent)
  
• Contracts, mortgages, notes and leases (expired)
• Employment applications (after termination)
• Expense analyses/expense distribution schedules
• Garnishments
• Inventories of products, materials and supplies
• Invoices (to customers, from vendors)
• Notes receivable ledgers and schedules
• Payroll records and summaries
• Personnel files (terminated)
• Purchase orders (purchasing department copy)
• Sales records
• Stock and bond certificates (cancelled)
• Subsidiary ledgers
• Time books/cards
• Voucher register and schedules
• Vouchers for payments to vendors, employees, etc (includes allowances and reimbursement of employees, officers, etc, for travel and entertainment expenses
• Withholding tax statements

Business records to keep permanently

• Accident reports/claims (settled cases)
• Audit reports
• Capital stock and bond records; ledgers, transfer registers, stubs showing issues, record of interest coupons, options, etc.
• Cash books
• Charts of accounts
• Checks (canceled for important payments, i.e., taxes, purchases of property, special contracts, etc. Checks should be filed with the papers pertaining to the underlying transaction.)
• Contracts, mortgages,notes and leases (still in effect)
• Correspondence (legal and important matters only)
• Deeds, mortgages, and bills of sale
• Depreciation schedules
• Financial statements (year-end, other optional)
• General/private ledgers, year-end trial balance
• Insurance policies (expired)
• Insurance records, current accident reports, claims, policies, etc.
• Journals
• Minute books of directors, stockholders, bylaws and charters
• Property appraisals by outside appraisers
• Property records, including costs, depreciation reserves, year-end trial balances, depreciation schedules, blueprints, and plans
• Retirement and pension records
• Tax returns and worksheets, revenue agents' reports, and other documents relating to determination of income tax liability
• Training manuals
• Union agreements

Personal records to keep for one year

• Monthly and quarterly mutual fund and IRA contribution statements until the year end statement arrives

Personal records to keep for three years

• Credit card statements
• Medical bills (in case of insurance disputes)
• Utility records
• Expired insurance policies

Personal records to keep for seven years

• Supporting documents for tax returns
• Accident reports and claims
• Medical bills (if tax related)
• Wage garnishments
• Other tax-related bills

Personal records to keep permanently

• Legal records
• Important correspondence
• Income tax returns
• Income tax payment checks
• Retirement and pension records

Special circumstances

• Car records (keep until the car is sold)
• Insurance policies (keep for the life of the policy)
• Mortgages/deeds/leases (keep six years beyond the agreement)
• Pay stubs (keep until reconciled with your W-2)
• Property records / improvement receipts (keep six years beyond the property sold)
• Sales receipts (keep for the life of the warranty)
• Stock and bond records (keep for 6 years beyond selling)
• Warranties and instructions (keep for the life of the product)
• Other bills (keep until payment is verified on the next bill)
• Depreciation schedules and other capital asset records (keep for 3 years after the tax life of the asset)