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How long should you keep records?

Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out.

You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, it is 3 years from the date of filing the tax returns unless the taxpayer filed a fraudulent tax return or under-reporting of income.

The IRS doesn't require you to keep your records in a particular way. Keep them in a manner that allows you and the IRS to determine your correct tax.

You can use your checkbook to keep a record of your income and expenses. You also need to keep documents, such as receipts and sales slips that can help prove a deduction.

To Summarize:

Every Taxpayer shall keep their records for at least 3 years from the date of filing their tax returns.

The taxpayer shall keep the documents with respect to Income and all the items claimed as either deduction or credit.

It is advised to keep the W2 documents until you start receiving the Social Security Benefits.

IRS may come back anytime within 3 years seeking supporting documents related to any/all of the items including income reported on the tax returns.

It is very important especially when the taxpayer claims Itemized Deduction instead of Standard Deduction on the tax return. For every deduction that you are claiming under Itemized Deductions, taxpayer must be able to maintain appropriate proof of payment which may include receipts, cancelled checks, bank and/or credit card statements.

If the taxpayer would not be able to substantiate the expenses claimed when sought by the IRS, then the IRS has every right to collect the taxes which the taxpayer claimed through itemization