How Long Should You Keep Records After Tax Day?

-As a rule, keep your tax records and supporting documentation until the statute of limitations runs for filing returns or filing for refund. For most taxpayers, that means that you'll want to keep those records for three years following the date of filing or the due date of your tax return, which ever is later. So, for example, if you filed your 2012 tax return on Tax Day, April 15, 2013, you'll want to keep those returns and those records until April 15, 2016

-If you file a clearly fraudulent return or if you don't file a return at all, the statute of limitations never actually runs. In that event, you'll want to hold onto your records, well, for forever (really, it's much less work to simply file).

-Supporting documentation for your tax returns includes not only your forms W-2 and 1099 but also bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.

-If you claim depreciation, amortization, or depletion deductions, you'll want to keep related records for as long as you own the underlying property. That includes deeds, titles and cost basis records. Similarly, if you claim special deductions and credits, you may need to keep your records a little longer than normal (for example, if you file a claim for a loss from worthless securities or bad debt deduction, you should keep those records for 7 years).

-If you have employees, including household employees, keep your employment tax records for at least four years after the date that payroll taxes become due or is paid, whichever is later. This should include forms W-2 and W-4, as well as related pay information including benefit forms.

-To save space you can scan your records and store them electronically. The IRS has accepted scanned receipts since 1997, a policy that was memorialized by Rev. Proc. 97-22 (downloads as a pdf). You just need to ensure that your scanned or electronic receipts are as accurate as your paper records and you must be able to index, store, preserve, retrieve, and reproduce the records. In other words, you need to have your records organized and be able to produce them in a hard copy form if needed.