RS can come after you if you fail to file a return or file one that is deemed false or fraudulent. The audit, admonishes the IRS, can begin "at any time."

Copies of returns should be retained indefinitely. They take up little space and are always helpful as guides for future returns or amending previously filed returns. Also, copies of tax forms may prove helpful in case the IRS claims you failed to file them.

Besides copies of returns, there are other tax-related documents that must be kept until they can no longer affect f

Unfortunately, there is no flat cutoff. The IRS says the answer depends on what information the records contain and the kind of transaction involved.

It supplements this vague guideline with a cryptic warning: Keep supporting records for "as long as they are important for the federal tax law." Translated from governmentalese, this means you should save receipts, canceled checks, and whatever else might help support income, deductions, exemptions, credits, exclusions, deferrals and other items on your return, at least until the expiration of the statute of limitations for an audit or for you to file a refund claim, should you find an error after filing. The statute of limitations is the limited period of time after which the tax gatherers are no longer able to come knocking and you cannot recover an overpayment.

In most cases, the IRS has only three years from the filing deadline to take a crack at your return. For example, the deadline is April of 2009 for the government to start an examination of a return for tax year 2005, with a filing due date, for most persons, of April of 2006.

As soon as three years elapse, you could toss out supporting records for income and expenses. Candidates for the garbage pail include W-2 forms, as well as canceled checks covering expenses.

WHEN IT COMES TO TAXES

But wait! Predictably enough, nothing is absolutely straightforward when it comes to taxes. There are two exceptions to the three-year test, though they do not apply to most people. Those exceptions aside, there are other situations in which it is advisable to keep documentation for far longer than three years -- proof of when you bought and sold investments, to cite a common example. More on that in a moment.

The first exception authorizes the IRS to double the audit deadline from three to six years if the amount of income you fail to report on your return is more than 25 percent of the amount you show on it. To illustrate, the six-year deadline expires in April 2007 for returns for tax year 2000 that were submitted in 2001.

The second exception provides that there is no time limit on when the IRS can come after you if you fail to file a return or file one that is deemed false or fraudulent. The audit, admonishes the IRS, can begin "at any time."

Copies of returns should be retained indefinitely. They take up little space and are always helpful as guides for future returns or amending previously filed returns. Also, copies of tax forms may prove helpful in case the IRS claims you failed to file them.

Besides copies of returns, there are other tax-related documents that must be kept until they can no longer affect fu

iration of the statute of limitations for an audit or for you to file a refund claim, should you find an error after filing. The statute of limitations is the limited period of time after which the tax gatherers are no longer able to come knocking and you cannot recover an overpayment.

In most cases, the IRS has only three years from the filing deadline to take a crack at your return. For example, the deadline is April of 2009 for the government to start an examination of a return for tax year 2005, with a filing due date, for most persons, of April of 2006.

As soon as three years elapse, you could toss out supporting records for income and expenses. Candidates for the garbage pail include W-2 forms, as well as canceled checks covering expenses.

WHEN IT COMES TO TAXES

But wait! Predictably enough, nothing is absolutely straightforward when it comes to taxes. There are two exceptions to the three-year test, though they do not apply to most people. Those exceptions aside, there are other situations in which it is advisable to keep documentation for far longer than three years -- proof of when you bought and sold investments, to cite a common example. More on that in a moment.

The first exception authorizes the IRS to double the audit deadline from three to six years if the amount of income you fail to report on your return is more than 25 percent of the amount you show on it. To illustrate, the six-year deadline expires in April 2007 for returns for tax year 2000 that were submitted in 2001.

The second exception provides that there is no time limit on when the IRS can come after you if you fail to file a return or file one that is deemed false or fraudulent. The audit, admonishes the IRS, can begin "at any time."

Copies of returns should be retained indefinitely. They take up little space and are always helpful as guides for future returns or amending previously filed returns. Also, copies of tax forms may prove helpful in case the IRS claims you failed to file them.

Besides copies of returns, there are other tax-related documents that must be kept until they can no longer affect f

t persons, of April of 2006.

As soon as three years elapse, you could toss out supporting records for income and expenses. Candidates for the garbage pail include W-2 forms, as well as canceled checks covering expenses.

WHEN IT COMES TO TAXES

But wait! Predictably enough, nothing is absolutely straightforward when it comes to taxes. There are two exceptions to the three-year test, though they do not apply to most people. Those exceptions aside, there are other situations in which it is advisable to keep documentation for far longer than three years -- proof of when you bought and sold investments, to cite a common example. More on that in a moment.

The first exception authorizes the IRS to double the audit deadline from three to six years if the amount of income you fail to report on your return is more than 25 percent of the amount you show on it. To illustrate, the six-year deadline expires in April 2007 for returns for tax year 2000 that were submitted in 2001.

The second exception provides that there is no time limit on when the IRS can come after you if you fail to file a return or file one that is deemed false or fraudulent. The audit, admonishes the IRS, can begin "at any time."

Copies of returns should be retained indefinitely. They take up little space and are always helpful as guides for future returns or amending previously filed returns. Also, copies of tax forms may prove helpful in case the IRS claims you failed to file them.

Besides copies of returns, there are other tax-related documents that must be kept until they can no longer affect f

on for far longer than three years -- proof of when you bought and sold investments, to cite a common example. More on that in a moment.

The first exception authorizes the IRS to double the audit deadline from three to six years if the amount of income you fail to report on your return is more than 25 percent of the amount you show on it. To illustrate, the six-year deadline expires in April 2007 for returns for tax year 2000 that were submitted in 2001.

The second exception provides that there is no time limit on when the IRS can come after you if you fail to file a return or file one that is deemed false or fraudulent. The audit, admonishes the IRS, can begin "at any time."

Copies of returns should be retained indefinitely. They take up little space and are always helpful as guides for future returns or amending previously filed returns. Also, copies of tax forms may prove helpful in case the IRS claims you failed to file them.

Besides copies of returns, there are other tax-related documents that must be kept until they can no longer affect f

RS can come after you if you fail to file a return or file one that is deemed false or fraudulent. The audit, admonishes the IRS, can begin "at any time."

Copies of returns should be retained indefinitely. They take up little space and are always helpful as guides for future returns or amending previously filed returns. Also, copies of tax forms may prove helpful in case the IRS claims you failed to file them.

Besides copies of returns, there are other tax-related documents that must be kept until they can no longer affect future returns, which can prove to be much longer than three years. For example, you need to retain records of residential costs, as well as payments for stocks and other investments. Those records are vital, not only because you may need them for an IRS audit, but because you need them to figure your profits or losses on sales that may not take place until many years later.