Preparing for an Audit
Keep all papers and documentation you used in preparing your return until the statute of limitations runs out for that return. This is usually four years from the date the return is due or filed.
Many taxpayers maintain their records much longer than four years. There are various reasons why the statute of limitations may remain open much longer than four years. If the federal IRS audits your return after the four-year time frame or if the Department of Revenue discovers that your return was not received, you may need to provide copies of your return and back-up documentation after the four-year time frame. Additionally, the information on certain tax matters may be needed long after the statute of limitation expires. For example, if you sell your home in 2004, you may need information from the year in which you purchased your home no matter how long ago the purchase of your home took place.
One common recommendation is to keep your tax returns indefinitely and your back-up documentation for at least six years. You may wish to check with a tax professional for advice as the answer may vary depending on your particular tax situation.