The length of time you should keep a document depends on the action, expense or event that the document records. Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the statute of limitations for that tax return runs out.
The statute of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax.
Keep purchase records for inventory and property and equipment that are still in use or available for sale. Generally, keep records relating to property until the statute of limitations expires for the year in which you dispose of the property. For example, three years after disposal.
A general rule is to keep financial records for three to six years, including canceled checks, bank statements and reconciliations, and employment tax records
For Washington Department of Revenue reporting, all records must be open for inspection and examination at any time by the department, upon reasonable notice, and must be kept and preserved for a period of five years. RCW 82.32.070. www.dor.wa.gov
For payroll and personnel records, businesses must keep records of the worker's name, address, occupation, hours worked on a daily and weekly basis, rate or rates of pay, total wages earned, deductions, and net pay for the pay period. Businesses must keep these records for three years after termination. www.lni.wa.gov
When your records are no longer needed for tax purposes, do not discard them until you check to see whether you have to keep them longer for other purposes. For example, your insurance company or creditors may require you to keep them longer.
Note: Keep all copies of your filed tax returns. They help in preparing future tax returns and making computations if you file an amended return. Keep your financial statements indefinitely.
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