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Tax Returns: How Long Should You Keep Them?

Tax day has come and gone and many of us are throwing our 2013 paperwork in with a pile of years past. So how long should we hold on to our prior year Tax returns?

The good news is you don't have to keep them forever. The IRS has statute of limitations, or a period of time in which they can take action. In auditing your return the period is three years. However, for unreported income, they have six years. It's important to note that both limitations are from the date you actually file your return.

A good rule of thumb is to hold on to your tax returns for seven years.

If you have records connected to assets, such as the purchase of property or other investments, you'll want to hold on to those records until the statute of limitation expires for the year in which you dispose of the asset.

If you are in doubt, check with your tax preparer. And remember, when you do decide to get rid of your returns, make sure all the paperwork is shredded.

For more information on this and other financial questions, visit BECU's collection of resources.