1. How long should support documents and prepared tax returns be retained?

Taxpayers should keep their tax records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means they must keep records that support items shown on their return until the statute of limitations for that return runs out. 

The statute of limitations is the period in which the taxpayer can amend his/her return to claim a credit or refund or the IRS can assess additional tax.

The following table from the IRS Publication 552, Recordkeeping for Individuals, contains the period of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period beginning after the return was filed. Returns filed before the due date are treated as being filed on the due date.

Periods of Limitations   If the taxpayer... Then the period is... 1 Owes additional tax and (2), (3) and (4) do not apply. 3 years 2 Does not report income that he/she should and it is more than 25% of the gross income shown on his/her return. 6 years 3 Files a fraudulent return No limit 4 Does not file a return No limit 5 Files a claim for credit or refund after he/she files his/her return. Late of 3 years or 2 years after tax was paid. 6 Files a claim for a loss from worthless securities. 7 years

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