A. Here is a rule of thumb to determine what tax documents you can get rid of and after how many years -
- IRS can initiate a tax audit 3 years after a tax filing, so keep everything for past 3 years' returns
- IRS has up to 6 years to audit people who neglect to report more than 25% of their income, so if you are self-employed or have a complex tax situation, keep records at least that long
- For stocks and funds in your taxable accounts, keep records that show the purchase prices and dates until you sell the investments
- For nondeductilbe contributions to a traditional IRA, keep form 8606 until you withdraw all of the money
- For business related expenses, keep documents forever