Hold onto actual tax returns indefinitely. They don’t take up a lot of space and can be stored electronically. Ditto for important papers, such as property records, deeds, titles and partnership documents that you may need for tax or sale purposes down the road.
Plan on keeping the paperwork that backs up any information reported on your tax returns—that is, receipts, confirmations of charitable contributions, 1099s, W2s and the like—for at least three years since the IRS can audit you within that period. Keep in mind, however, that states have their own rules for auditing; California, for example, has four years to initiate the process. You’ll want to defer to whichever has the longer statute of limitations—the state or federal—and keep both sets of forms, since in most states the state return is based on the federal.
If your situation is more complicated – you file a loss for a worthless security or bad debt, for example – keep your records for as long as seven years. If the IRS suspects fraud, they have that long to go back in your tax history.