Unless you filed an extension, tax filing season is finally over. Now the question is how long to keep the return, and the documentation relied upon to prepare it. The law requires you to keep returns and records which show whether or not you are liable for a tax for as long as they are material to the administration of the tax laws. In other words, you must maintain records substantiating income, deductions and credits reported on a return until the IRS’s right to audit the return ends.
Generally the IRS can audit a return for three years from the time the return is filed, or from its due date, whichever is later. If there is an omission from gross income of 25% or more the IRS has six years to audit. Unfiled and fraudulent returns can be audited at any time. Thus, at a minimum records need to be kept for three years after the filing of the return.
There are records, however, which need to be kept much longer than three years. Real estate closing documents, including HUD-1, and receipts for capital improvements on real estate should be kept as long as you own the property and for three years after the property is sold. In the case of investment rental real estate an appraisal of the property should be obtained and used to determine depreciation. The appraisal report should be maintained for three years after the property is transferred.
If you pay an employee, such as a nanny or other household help, you must keep employment tax records (for example W-2s) for four years from the time the tax was due or paid, whichever is later.
Lastly, gift tax and estate tax returns should be kept indefinitely.
Note that there may be reasons for keeping documents that are not related to tax administration. Before discarding documents all provisions, not just tax, need to be taken into account in deciding if destruction is proper.
If in doubt, keep the documentation as long as possible. In the digital age keeping records indefinitely is not as difficult as it once was. So long as you can access and print the digitized document you should have no problems.