What records and documents should you keep in case the IRS ever decides to audit you—and for how long should you keep them?

Here’s some advice to consider:

• The standard statute of limitations is three years, but the IRS can audit up to six years after a filing if it suspects under-reporting of income by more than 25 percent.
• If auditors find fraud, or if you fail to file a return at all, there is no statute of limitations. For this reason, many tax advisers recommend hanging on to your tax returns forever. Then, if the IRS claims it has no record of you filing for a certain year, you will have a copy to defend yourself.
• It also makes sense to keep backup documents to your tax returns, such as W-2 forms, receipts for charitable donations, and other deductible expenses for at least six years.
• As for investment statements, you only need to keep monthly or quarterly documents until you receive a year-end summary. These summaries, along with stock certificates and any documents related to investment purchases or sales, should be kept for as long as you own the investment plus an additional seven years after you file taxes reflecting the sale.
• This same schedule applies to mortgages. Keep the monthly statements until the year-end statement arrives. Save these annual statements for the term of the mortgage, plus seven years.
• Unless you are being audited, monthly bank and credit card statements can be discarded after a year.