If the IRS ever decides to audit you (sorry), you will need receipts, bank statements, cancelled checks, and all other documentation. So, how long should you keep all these shoeboxes full of paper?
- 3 years is the standard. The IRS normally has 3 years to audit your tax return after it was filed.
- Double it to 6 years if you want to be absolutely safe, because under some rare circumstances the IRS can dig 6 years back.
- Critical gotcha: for the property that you own (real estate, investments, business vehicles) you should keep everything until 3 years after you sell it. If you bought a rental house back in 2005, and you sold it in 2016 – hold on to your 2005 purchase documents until April 2020. Why 2020? Because the tax return for 2016 was filed in April 2017, plus 3 years.
If you care to read more, the IRS website offers a more detailed but also more confusing official guidance on keeping records.