What should you do with the copies of your returns and the supporting tax documentation once you have filed your taxes? Generally, the government has three years from the due date of the return, or any extension, to audit your returns and assess additional taxes. Therefore, at an absolute minimum, you should retain all filed forms, schedules, and supporting documentation for at least that long. While there is no limitation on the government auditing a return that was fraudulently prepared, the three year look-back period provides a time frame for the vast majority of filers.
Many taxpayers keep their tax records forever. While this may be beneficial for your own edification, there typically is no tax related reason requiring you to maintain those records for more than the look-back period. However, some important documents and supporting materials that are important to keep are documents related to your investments (i.e., purchase price, reinvested dividends, splits, etc.) and settlement statements for real estate. Any document related to a capital asset that you have not yet disposed of may be needed to determine gain or loss in the future.