How long do you need to keep documents for?

Type of record

Length of time to keep, and why:

• The IRS has three years from your filing date to audit your return if it suspects good-faith errors.
• The three-year deadline also applies if you discover a mistake in your return and decide to file an amended return to claim a refund.
• The IRS has six years to challenge your return if it thinks you underreported your gross income by 25 percent or more.
• There is no time limit if you failed to file your return or filed a fraudulent return.

• Keep the quarterly statements from your 401(k) or other plans until you receive the annual summary; if everything matches up, then shred the quarterlies.
• Keep the annual summaries until you retire or close the account.

• Go through your checks each year and keep those related to your taxes, business expenses, home improvements and mortgage payments.
• Shred those that have no long-term importance.

• Go through your bills once a year.
• In most cases, when the canceled check from a paid bill has been returned, you can shred the bill.
• However, bills for big purchases -- such as jewelry, rugs, appliances, antiques, cars, collectibles, furniture, computers, etc. -- should be kept in an insurance file for proof of their value in the event of loss or damage.

• Keep your original receipts until you get your monthly statement; shred the receipts if the two match up.
• Keep the statements for seven years if tax-related expenses are documented.

• When you receive your annual W-2 form from your employer, make sure the information on your stubs matches.
• If it does, shred the stubs.
• If it doesn't, demand a corrected form, known as a W-2c.

• Keep all records documenting the purchase price and the cost of all permanent improvements -- such as remodeling, additions and installations.
• Keep records of expenses incurred in selling and buying the property, such as legal fees and your real estate agent's commission, for six years after you sell your home.
• Holding on to these records is important because any improvements you make on your house, as well as expenses in selling it, are added to the original purchase price or cost basis. This adds up to a greater profit (also known as capital gains) when you sell your house. Therefore, you lower your capital gains tax.