At first, keeping a file of financial documents for such long periods might seem unnecessary. However, holding on to important records can help you in a variety of situations such as dealing with the IRS, preparing financial statements, and negotiating with the bank.AuditsIf you get audited by the IRS, it is crucial that you are able to produce your financial documents quickly. ApplicationsWhen applying for a mortgage or other large loan, you may be asked to produce previous tax returns as proof of income.AmendmentsIf you need to amend a tax return, you will need to reproduce the relevant documentation.