The Internal Revenue Service recommends that tax filers keep their returns for three years since the IRS only audits returns for the prior three years, states Intuit. Because there are exceptions to the three-year statute of limitations on audits, the more cautious recommendation is to keep tax returns and supporting documents indefinitely, says MarketWatch.Continue Reading
People who have under-reported their income by more than 25 percent can have their returns re-examined for as many as six years, and returns that include a loss due to a bad debt or worthless security are open to scrutiny for seven years, according to Intuit. There is no limit to how far back the IRS can go in examining records for people who do not file taxes or file a return that includes fraud.
Tax returns and documents to support them, such as W-2s, are useful outside of IRS audits, according to MarketWatch. Tax documents are acceptable as proof for Social Security credits that the Social Security Administration doesn't have on record.
People need to treat property records differently than the rest of the documents that support a tax return, states the IRS. Tax filers need to keep property records for the limitation period starting on the date on which they dispose of the property instead of the date of the tax filing.Learn more about Taxes