T he IRS says taxpayers must keep old tax returns and other tax records for as long as they may be needed for the administration of any provision of the Tax Code.

Generally, this means you must keep records that support the items shown on your return until the statute of limitations for that return runs out.

Normal audit limit	...................................3 years
Audit limit if gross income is understated by 25% or more	...................................6 years
Time limit for deducting worthless securities/bad debts	...................................7 years
Audit limit if no return is filed	...................................no limit
Audit limit if fraud is committed	...................................no limit

Important: All tax records for properties such as homes, businesses, and investments should be held until you dispose of them and report the disposition on your tax return, in addition to the time limits above.

Trap: The IRS can always create a situation in which it says no time limit applies to your return by alleging that you never filed or that you committed fraud on your return.

You’ll need copies of your return to refute such an allegation -- so the safest practice is to keep your returns forever.