Excellent advice on keeping the clutter down. I am the world's worst packrat when it comes to financial statements. The other day I found a receipt to Starbucks for a tall Frappaccino from back in July '99! I think I saved it because it was going to be "my last receipt from Starbucks." You know, the "Latte Factor" was taking its toll and I was stopping it cold turkey. Well, let's just say that was one resolution I never kept!

One reason to keep tax returns is just to
be able to look back and see how you were
doing, from 15 or 25 years down the road....
personal historical interest, you know.

The Statute of Limitations refers to the maximum time that the IRS has to select a return for audit. The general rule is that the return can be audited within 3 years from the original due date of the return or 3 years from the date it was actually filed, whichever is later.

If income has been omitted from the return that is more than 25% of the income reported on the original return, then the statute of limitations is extended to 6 years.

If fraud was involved in the return, then there is no statute of limitations and the IRS can look at the return regardless of how long ago it was.

There may be time limitations on the IRS coming after you, but what about state tax departments? I don't know if they have the same time limitations as the IRS.

A few months ago I received a notice from the tax department of a state in which I lived during part of 2000 that indicated that I owed taxes from the 2001 tax year. The state was wrong, as I didn't live there in 2001. However, I was surprised that they were acting upon something from 5+ years ago.

There may be time limitations on the IRS coming after you, but what about state tax departments? I don't know if they have the same time limitations as the IRS.

A few months ago I received a notice from the tax department of a state in which I lived during part of 2000 that indicated that I owed taxes from the 2001 tax year. The state was wrong, as I didn't live there in 2001. However, I was surprised that they were acting upon something from 5+ years ago.