{Editor’s Note: This post was originally published in August 2013 and has been updated for accuracy and comprehensiveness.}

Some taxpayers might feel that they don't need to keep their income tax documents unless they have particularly complex tax situations. The reality is that all taxpayers should keep their essential tax documents on file. Depending on your circumstances, you may need to keep your records for several years, in case of an audit or to back up a claim.

Important Tax Documents

The most important tax document to keep is, of course, your IRS Form 1040 or whichever tax return you use to file. This document contains figures and private data that you should maintain for a time such as your total income for the year, your adjusted gross income (AGI), your dependents and your total refund. Since the tax return contains private information such as your full name, address, the names of your spouse and dependents and your Social Security numbers you may wish to keep it in a secure place in your home. Other important tax documents include the W-2 forms from your employer that apply to the return, any supporting schedules such as Schedule A, Schedule C, or Schedule D and the receipts that support your deductions.

How Long to Keep Your Records

A general rule is to keep all of your tax documents for at least three years. But, in some situations, it may be advisable to retain them for up to seven years. Here are the general guidelines for how long to keep IRS tax documents:

3 Years: Keep records if you file a claim for credit or refund or if no fraud or substantial error is suspected.

6 Years: If you fail to report income that’s more than 25% of the gross income shown on your return.

7 Years: If you file a claim for a loss from worthless securities or bad debt deduction.

Indefinitely: If you don’t file a return or file a fraudulent return.

Other Documents:

• Property records: Keep until the period of limitations expires after you sell the property.
• Employment tax records: Retain for at least 4 years after the tax is due or paid.

 It's also wise to keep your forms organized by tax year, so if you need to refer to them you can easily find the relevant tax return for the year in question. If you electronically file your return you'll have the option to store your documents online but you should also keep backup paper copies.

Why Recordkeeping is Important

Keeping your tax records on file is important for a couple of reasons. First, it helps you to be prepared in case of an audit. Since the IRS has a three-year window to go back and audit your return, you'll want to keep your records for at least that long. Small business owners, in particular, do well to keep their records for that long. Business owners have a particularly high probability of being audited and showing proof of their income and deductions can help them avoid paying back taxes. Some taxpayers may wish to keep their tax documents for up to seven years. This is especially advisable for those who have extremely complicated returns, since the IRS can audit returns up to seven years ago if agents suspect fraudulent reporting.

Knowing what tax documents to keep and how long can help you prepare for a possible audit. If you have questions about how to store your documents, consult a qualified tax resolution professional.