Generally, financial records should be kept on file until the expense, income or asset is no longer necessary for filing tax returns, which could be indefinitely, according to the Internal Revenue Service. The time length can range from two to seven years in most cases.Continue Reading
Although the length of time financial records should be kept on file will depend on the nature of the documents, the Internal Revenue Service recommends keeping financial records for three years if the individual owes additional taxes. If the individual does not report income that should be reported, the Internal Revenue Service recommends keeping financial records on file for six years. A person who has filed a fraudulent return or did not file a tax return at all, should hang on to financial records indefinitely as an audit may require this documentation.
The Internal Revenue Service recommends individuals keep employment tax records for at least four years and keep financial records for two years if a tax return was filed with expectations of a refund or payment. If a claim for loss from a bad debt deduction or worthless securities was filed, the financial records should be retained for seven years, according to the Internal Revenue Service.Learn more about Accounting