One of my clients recently asked me about how long they should keep records for taxes, bank statements, and other financial information. I found this article on Kiplinger that addresses my client's concerns.
It's a good idea to keep your tax returns forever. But you can usually toss the supporting documents, such as canceled checks and old receipts, three years after you filed your taxes.
That's usually how long the IRS has to audit your return, unless you've left out a big chunk of income. If you have any self-employed income, keep the receipts for at least six years.
Keep receipts for major home improvements until you sell the house. You may want to show potential buyers how much you've spent, and you can use certain home-improvement expenses to lower any tax bill you might have on your home-sale profits. (You generally won't be taxed when you sell your house, unless you have lived in it for less than two years, if you rented out part of it, or if you sold it for more than $250,000 in profit if single or $500,000 if married).
For the items you toss, use a shredder to shred financial papers which protects your privacy and it also makes it easier to recycle. Kiplinger has a great guide, but I also recommend talking to your CPA just in case.
From Nichelle Stephens, Small Business Bookkeeper and Founder of Keeping Nickels.