How long to keep client electronic records

[LEVA4657]

How long should I keep electronic client records? Also, within ProSeries, a number of prior 1099 & W-2 prepared form(s) from prior years remain on the record even though they have been deceased for a number of years.

[TaxGuyBill]

The IRS generally requires you to keep certain things for 3 years (4 years for payroll).  However, in some cases the starting date of the three years is funky, so I recommend keeping them for 4 years.

Some tax organizations may recommend longer (such as 7 years), but that isn't required by the IRS.

With that being said, I tend to keep some records of current clients for longer, in case I need to refer to them or in case my current client somehow ends up in an audit further than three years back.

[qbteachmt]

The start date for counting is often from the filing date and not the tax year. I keep most records 7 years. And there are some items, when audited, that can trigger a further lookback. You will want to evaluate the type of work you do and what that entails. I was cleaning out a preparer's storage unit and contacting the clients with what looked to me to have significant original records stored there, and one told me for certain they had copies of everything. Guess who contacted me in the next 6 months, looking for their original banking records?

[TaxMonkey]

I have never discarded any.  Scanned and saved forever.

[LEVA4657]

Thanks for the note as I am pretty much in a similar position. With that said, I have also taken steps to ensure that I have it secured and in a safe place off-site.

[Drphibes]

I have a machine that has Win95 and another with Win3.11 in order to run tax software and tape backup drives storing info from way, way back.  Have actually had to go back to some of the old old info for client stuff such as basis of house when other laws on deferring gain on personal residences were in effect.