Federal law requires you to maintain copies of your tax returns and supporting documents for three years. This is called the “three-year law” and leads many people to believe they’re safe provided they retain their documents for this period of time.
However, if the IRS believes you have significantly underreported your income (by 25 percent or more), it may go back six years in an audit. If there is any indication of fraud, or you do not file a return, no period of limitation exists.To be safe, use the following guidelines.
While federal guidelines do not require you to keep tax records “forever,” in
many cases there will be other reasons you’ll want to retain these documents
While it’s important to keep year-end mutual fund and IRA contribution
statements forever, you don’t have to save monthly and quarterly statements
once the year-end statement has arrived.