GREENSBORO, NC -- I did my taxes last night and got to thinking, "Do I really need the returns from 2000?"
Rules change, so I researched it for you and me!
gives this time line:
Three years. You need to keep federal state income tax returns, the receipts and statements that go with them for three years. If you are audited, the IRS will want to see all documentations and deduction paperwork for the last three years.
Six Years. You want to keep returns that include under-reported income by 25% or more. Under-reported income often happens when you sold property or securities and the cost records are unclear.
A CBS financial analyst has a few additions to that six year list. His rule of thumb, keep records and tax returns for years that include:
Atypical transactions -- those are sales or donations of property.
Irregular income-- that would be stock option exercises or trust income.