After you submit your annual tax return, you should hold onto your records for three years or more. Thus, if you sent your 2011 tax return to the IRS by the April 17, 2012, deadline, you should keep your supporting documents at least until April 17, 2015. That will be the IRS deadline for questioning your return, so you should hold onto all the records supporting the tax deductions and credits you claimed on the return.
There are some exceptions to the three-year rule, including:
* You should keep your copies of the W-2 Forms you received for 2011 until at least 2016, so you have a record of your earnings. If you or your spouse received any 1099 forms for self-employment income, keep those for four years as well.
* Any records for investments you made in a taxable account should be kept indefinitely, to show your profit or loss on a sale in the future. The same is true for real estate purchases.
* If you made capital improvements to your residence or to a vacation home, retain the relevant records as well. Those improvements can increase your cost basis in the home and may reduce tax on a sale.
* If you made nondeductible contributions to a traditional IRA, keep copies of the Form 8606 you filed with your tax return as well as any supporting documents. That paperwork will support your claims of reduced tax obligations on future withdrawals and any Roth IRA conversions.
