Financial Records
The IRS requires you to keep financial records for at least three years after you file your return. In the event that you are audited, you will need your records to prove that the information on your return is truthful and accurate. Plus in order to legally claim many deductions and credits, you must maintain financial records that prove you actually incurred the expenses you are claiming. If the IRS suspects that you failed to report 25% of your gross income or more, they will require you to produce records from the last six years. Therefore it’s best to maintain records from the last six to seven years.
In addition to copies of your old returns and other IRS forms - such as W-2s and 1099s - you should keep income and expense records too. Income records include paycheck stubs, statements of interest or dividends earned, and records of gifts, tips, and bonuses. Spending records include canceled checks, cash register receipts, credit card statements, and rent receipts.