Learn more about why it’s necessary to keep bank statements, for how long, and what happens if you don’t.

How Long Should You Keep Bank Statements?

In most cases, you’ll need access to your bank statements for at least three years (but possibly up to seven) as proof in audit situations. Bank statements of the past year should be kept for tax-filing purposes, but you may also need them to get a loan or rent a home. Banks are required by federal law to keep most records on file for at least five years, and many keep members’ account statements available for up to seven. Check with your bank to see how long it will keep your records. If an audit or another need for a statement comes up within that time period, you can order them from your bank rather than keeping them on hand—although you may need to pay a small fee for older statements.

Why Should You Keep Bank Statements?

One of the main reasons you need bank statements is to have proof of an item of income, deduction, or credit for the Internal Revenue Service.

The IRS has a period of limitations that applies to income tax returns, and it limits the amount of time you have to amend your return, claim a refund, or claim a credit. Additionally, the period of limitations restricts the time the IRS has to assess additional tax. In many cases, your state’s period of limitations will coincide with the IRS deadline of three years, but there could be some exceptions where you live. Be sure to check your state’s laws to ensure your statements are accessible for the audit period. If you need to amend your tax return to claim a credit or refund but you can’t access your bank statements, you may not be able to prove you deserve that credit or refund. Further, if the IRS assesses additional tax you know you don’t owe, you may need your bank statements to prove why you don’t owe it.

Other Reasons To Hold On to Bank Statements

Keep bank statements for future lenders, landlords, and others with whom you’d like to start a financial relationship. When determining if you can afford the payments for a loan, a rental home, or something else, they may request to see your bank statements to verify your income. Bank statements can also come in handy to show proof of purchases made by debit card, check, or bank transfer should someone claim you owe them money. And if you need to use a product warranty or file an insurance claim, a bank statement could help by confirming you made the connected purchases.

When Should You Keep Bank Statements Longer?

In some cases, the IRS suggests you keep records longer than three years due to the amount of time the agency can audit you.

If you pay employment tax, you’ll need to keep the records for four years after the tax becomes due or is paid, whichever is later. If income is not reported and it accounts for more than 25% of your gross income, or if the IRS suspects this is the case, it can audit you anytime for six years. If you report a capital loss due to bad debts or worthless securities, you should keep your records for seven years.

If your taxes are relatively simple and you’ve filed them accurately, you likely won’t have to worry about keeping banking statements beyond three years. However, if you have more complicated finances, including investments, it’s a good idea to ensure you can access them for seven.

Organizing Bank Statements and Other Documents

Having a way to store and keep track of your statements can make it easy to access information if and when you need it.

Paper Statements

If you prefer to keep years of physical statements on file, you’ll need to have some space to do so. Here are a few recordkeeping tips for hard-copy records:

Purchase a dedicated file cabinet for your financial documents.Separate the documents by year.Organize the documents by type and category (personal bank statements, business bank statements, investment statements, credit card statements, etc.).File them in chronological order so it’s easy to find what you need quickly.Keep the most important documents in a fireproof safe.

Electronic Statements

With electronic statements being more and more common, you may opt to keep virtual records. However, should you decide to go that route and keep them saved on a single device, you run the risk of losing records if the device crashes, gets lost, or is stolen. Consider backing up records on a secure secondary storage device or in a secure cloud environment. Another option with digital statements is contacting your bank to find out how long it keeps statements, so you can access them on demand as needed. Often, banks enable you to access, download, and print a few years’ worth of statements through online banking. If you need a statement that isn’t available online but it is still within the time period your bank keeps records, you can usually order it. Time frames and fees can vary by institution and account type, so check before going this route. The IRS can audit you for up to six years if it suspects you underreported your income by at least 25%. Keep your tax returns for seven years if you file a loss for bad debt or worthless securities. For personal credit cards, it’s best to keep statements for 12 months to verify charges made to you, services you paid for, business expenses, charitable donations, or—if disputed—an on-time loan payment.