How many years do you save REceipts & Bank Statements for Income Tax Purposes? (sell, live)

[wehotex]

I have heard different opinions that the IRS can audit everything from 3 years from the current tax year to "as far back as it wants to audit your records". Who is right?

[dazzleman]

I think it's either 5 or 7 years.

There are certain things you should save a lot longer. For example, as long as you live in your house, you should save all the documents relating to what you paid for it, and the capital improvements you made for it, since all that can come into play when you sell it.

Same thing for stock that you continue to own. Save the cost basis information.

[Pitt Chick]

Seven years... UNLESS they suspect fraud. Then they can go back as far as they want.

[Jaggy001]

I don't get paper bank statements any more. Everything is electronic.

[Thepreacherswife]

For returns that have been filed, the IRS generally must assess tax within three years of the due date for filing. For substantial understatement of income (25% or more) the time limit is six years. There is no statute of limitations in the case of false or fraudulent returns or if a return is not filed.

Once they assess the tax, they generally have ten years to collect.

Most accounting firms will save backup data (copies of receipts, workpapers used to prepare returns, etc.) for 8 years. They keep the returns forever. I keep my paper receipts for 3 or 4 years. When I had paper bank statements I kept them for a year. But most things these days are paperless; the few paper items I have I scan and put on a CD with other electronic data for that year.