How long to keep tax returns, other documents?

Spring cleaning: How long to keep tax returns, other documents?

With spring elbowing out winter for good, I'm finally getting serious about spring cleaning and organizing. At our house, that means moving the summer clothes out of storage, calling a local handyman to fix the garage door, and tackling the paperwork. 

I've just put our 2009 tax returns with their counterparts for the prior 6 years. Tax returns and supporting documents should be kept for 7 years. But as the video here shows, there are lots of documents not worth keeping more than a year. Bank statements, for instance, don't need to be kept once the new monthly statements arrive. In fact,  Consumer Reports Money Adviser recently published a useful list of what paperwork to keep, and how long and where to keep it that's worth reviewing.

The only reason to keep bank statements is if you'll need them to justify transactions like business expenses and charitable donations noted on your tax returns. Since I use a online budgeting program that links to my bank account and helps categorize my expenses for tax purposes, I really don't need paper bank statements at all. In fact, I recently signed up for paperless banking; my banks lets me view 7 years' worth of statements online, including cashed checks. So any old checks and check registers can be thrown out, too. (For years, I've saved carbon copies of my checks; those can go, as well.)

That doesn't mean I've eliminated paperwork. I haven't signed up to automate everything online yet, so I've still got bags of stuff to shred. For sensitive documents, Consumer Reports recommends using a crosscut shredder.—Tobie Stanger

Consumer Reports Money & Shopping Blog: Spring cleaning: How long to keep tax returns, other documents?