How long to keep records

Every few years, I stop by Staples for a new five-pack of record-keeping boxes. Uniform boxes stack together so much better than odd-size ones from the supermarket, and they make my load of financial records nice and neat.
But, boy, is that load of records taking up space! I must have 15 or 20 of these 2-foot cartons -- I'm not sure because some are stuffed away in some pretty odd corners.
Is it really necessary to keep all this stuff forever?
Well, only crooks need to think about forever.
That's because if you file a fraudulent tax return, or fail to file a return, the IRS can come after you no matter how long it takes to get wind of your shenanigans. All you crooks out there will need your financial records for your defense.
The rest of us can start weeding out records after only a few years.
By records, I mean the sales slips, brokerage statements or other documents supporting claims you've made on your return. The return can be thrown out after a few years -- but I'd keep it just in case.
Depends on IRS rules
Otherwise, the key factor is the "period of limitations" during which you could amend a return or the IRS could come after you for additional tax payments. That period is:
USeven years from the filing date (or due date if you filed early) for you to file a claim for a loss from a worthless security. If you had shares in a bankrupt dot.com and you forgot to claim the loss on your return, you'd have seven years to correct the oversight.
USix years if you need to report income that you should have, assuming it comes to more than 25 percent of the gross income on your return.
UThree years if you owe more tax than you paid, assuming that the previous rule does not apply and that you're not covered by the provisions for crooks mentioned above.
UThree years from the filing date if you want to file a claim for a credit or refund you'd forgotten to list, or two years from the date the tax related to this item was paid, whichever is later.
These rules pertain to time periods after a return was filed. But don't heave those old records just yet. You may still need lots of old records for returns you will file in the future.
Years or decades from now, you may well file a return reporting a profit or loss from an investment sold during that year. You'll need original records such as trade confirmations or statements from your broker or mutual-fund company showing what you paid for it.
Don't count on your broker or fund company to keep this data for you.
Other factors
Also, if you accumulated a block of shares in a stock or fund at various prices over time, the broker or fund company may provide data on the average price paid for all the shares.
It could also be important to keep records on your home for calculating the cost basis if you eventually sell. The cost basis is the price originally paid plus the cost of all major improvements. This total cost is subtracted from the sales proceeds to determine the profit.
For a couple filing a joint tax return, the first $500,000 in profit is tax-exempt, but that figure is $250,000 for a single person.
It may seem today that your profit will never exceed such a high threshold. But who knows how much your home will be worth in 20 or 30 years. Best keep permanent records of any significant expenditures on your home.
For detailed record-keeping pointers, get IRS Publication 552. See it online at http://www.irs.gov/pub/irs-pdf/p552.pdf or order by calling (800) 829-3676.
By the way, if you've thrown out an old return, you can get a copy with all attachments by filing Form 4506, Request for Copy or Transcript of Tax form. Order at the number above or go on the IRS site, http://www.irs.gov.
XJeff Brown is a business columnist for The Philadelphia Inquirer. E-mail him at jeff.brown@phillynews.com.