Some people toss all of their bank statements into a drawer; others place them into an expanding file that never gets cleaned out. Most people would be more motivated to clean out their records if they knew how long they needed to save these documents and when to let go. Bankrate.com's recommendations are far better than either method mentioned above.
Keep your bank statements for at least one year. After that, store any statements that deal with taxes, business expenses and home improvement expenses. Shred statements that contain no vital transactions.
Keep copies of your bills for one year. Shred the bill once the canceled check from the bill has been returned, if your bank returns these checks. Store bills for items of value, such as jewelry and appliances, as proof of value in case of theft, loss or damage.
Keep all pay stubs for one year. Check to be sure your stubs match your W-2. If they do, send them to the shredder.
Tax records should be kept for seven years. The IRS has up to three years to audit you for errors, just as you have three years to file an amended return. Should the IRS suspect you under-reported your income by 25% or more, they have six years to audit.
Ensure that you keep your receipts and statements organized to save yourself from paperwork panic every April.