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How Long Should I Keep Financial Paperwork?

Question: How long should I keep financial paperwork, like bank statements, tax returns or even medical documents?

— Susie May, Fremont, Neb.

Answer: The urge to purge can be powerful, but don’t rush to fire up the shredder. Experts recommend holding on to bank statements for at least three years, and tax returns—plus related paperwork—for at least seven. (The IRS can audit you up to three years postfiling and has six years if it thinks you failed to report more than 25 percent of your gross income.) As for medical records, those related to chronic conditions and major medical procedures should be kept indefinitely, says the National Foundation for Credit Counseling’s Gail Cunningham, who recommends scanning and storing documents electronically to cut clutter.

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