Receipts to Keep for Taxes
Keep Personal and Business Tax Records Accurately but, which Receipts to Keep for Tax Filing?
Receipts, receipts, receipts!! Learn which Receipts to Keep for Taxes, not everything is a write off and you don't need them to store all that extra paperwork. Preparing for your taxes is important during the entire year and not just around tax filing time. Start now to get your paperwork in order! If you only worry about tax receipts and documents during tax time, you're probably spending too much time around April getting ready to file your taxes.
Be proactive and start sorting tax receipts to keep for taxes now! Tax documents and receipts can take up a lot of room in your home if you've been filing taxes for a long time. I've been filing taxes a long time and have had two businesses for the last 17 years that require special care of tax papers and I'm here to help you with your own personal taxes and business taxes. Keeping receipts can help you offset your tax liability and help you pay less taxes through all your itemized tax deductions.
We'll help you answer these important tax questions: Do you really need all those receipts? Have you wondered which receipts to keep for taxes and which you can throw away. What about the tax return documents themselves? What can you toss after your taxes are filed? Getting rid of receipts you don't need helps your office organization and reduces office clutter so you can get more work done and uses your time wisely.
Whether you start preparing your receipts in January for the upcoming year or even if you need to start to get your tax papers in order mid way through the year, we'll help you know what you'll need and how long you'll need it.
Avoid getting into trouble with the IRS and learn which receipts to keep and what you can comfortably throw away, shred and eliminate part of the clutter in your home from unnecessary paperwork with this article. Let's tackle all those receipts!
(image courtesy of amazon)
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Receipts to Keep for Taxes
A word of caution about receipts!
If you are itemizing your tax deductions, you'll need all receipts that you are claiming as a deduction. That can add up to a lot of receipts but, it's important to make sure you have a receipt if you ever get audited. If you take a deduction and don't have a receipt, the IRS will not allow that deduction and you'll need to remove it as an allowable deduction.
A cancelled check is not considered a receipt for the IRS - get a receipt for anything you write a check for and keep the receipt using these guidelines of receipts to keep for taxes.
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Use this simple tax receipt organizer for all your online payments too. Simply print a copy of your receipt and file neatly. I love having these with me in my car to use as soon as I make a purchase that is for my business. Simple and Cheap!
This handy and simple atm receipt organizer is the size of a number 10 envelope so you can easily fit all your business check receipts, coupons or business receipts already organized by month. There are 13 slots, use on per month with the included tabs. It's expandable so you can easily access each slot and it holds enough receipts for a year - making tax filing time so much easier. It's also biodegradable when you're done with it, love these eco friendly products!
Good Idea and Tax Organizing Tip:
Get a new receipt organizer for your receipts each year just in case you're ever audited by the IRS - they're inexpensive and a great way to store your tax receipts.
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Plus, you can shred old receipts that you no longer need or that aren't a tax deduction.
What Receipts to Keep and for How Long
The IRS can audit you for your personal tax return for up to three years so, the basic rule is to keep all your personal tax receipts for at least three years. Businesses have slightly different rules and some paperwork such as payroll, banking, insurance needs kept longer.
FOR THE HOME: PERSONAL TAX RETURNS
CASH RECEIPTS: Keep all your cash receipts for your tax deductions including home improvements such as energy star appliances; window, door and wall insulation; solar panels and installation or additions to your home. These cash receipts are very important since you won't have any other backup documentation like you would if you paid with a credit card. Clothing and personal care items are usually not acceptable for your tax deductions unless they are items you only use for work such as work uniforms, shoes and work supplies.
CREDIT CARD STATEMENTS: If you use your credit card during the year for your tax deductible purchases, these are great because you will have the statement showing the purchase along with the date and at the end of the year most credit card companies provide a breakdown of purchases. This is a very handy document to keep and you only need them for three years.
HIRED HELP: If you hire assistants during the year for your home, child care or tax help keep receipts of all payments made and keep these for three years after your taxes are filed.
INSURANCE: Insurance payments made monthly or quarterly should be kept to make sure each payment is documented correctly. The insurance plan documents should be saved just in case you need to verify coverage, have a question about your coverage in case of an accident or if a family member may need access to your account in case of your death.
MORTGAGE RECEIPTS: Most people pay a monthly mortgage using a coupon booklet from the lending agency. It's a good idea to keep these to compare payments made to your year end document. At the end of the year, your mortgage company will send you one form that documents how much mortgage interest you've paid. This is the only tax document you need to save and should be kept with the year end tax return.
LOANS: These documents should be kept at least as long as you continue to have the loan and it is fully paid off so that you can refer to the terms of your loans. Once the loan is paid off, you will receive a document from your lender stating the loan is paid in full. This is the tax receipt you'll need to keep with your year end tax return and then you can discard all the other monthly payment receipts.
What Receipts for Taxes You Can Toss
PERSONAL TAX RETURNS
This is the FUN section!!
*** For your personal tax returns, later we'll discuss business tax returns which are different.
There's a great feeling knowing that you can get rid of so much unnecessary paperwork legally and avoid cluttering up your office area and home. Let's get to the What Tax Receipts to Toss Fun!
ATM RECEIPTS: These you will only need long enough to double check your bank statement and make sure that your deposits and withdrawls have been properly documented in your bank account. TOSS!
UTILITY BILLS: Unless you own a business, you only need to save your month to month utility bills once the new one arrives. Double check that your prior month's paid bill is posted correctly and then TOSS!
CREDIT CARD STATEMENTS: Only keep your monthly credit card statements long enough to make sure that each of your purchases made the prior month and the payment made is documented correctly. Notify your credit card company if there are any mistakes or adjustments that need correctly or if it's all correct, TOSS. You'll get a year end statement that you can keep for tax returns if needed.
BANK STATEMENTS: Similarly to your credit card statements above, bank statements should be reconciled monthly and you can even double check them with your online banking so if all is good, TOSS or notify your bank of any corrections that need to be made.
CANCELLED CHECKS: Most banks keep all your cancelled checks online and don't return them as they did years ago. If you use a checkbook with a carbon copy, those are not needed once you have made sure that your check has cleared the bank and shows up on your bank statement or online so, feel free to TOSS.
RECEIPTS: General purchases for your groceries, personal care items, clothing, school supplies or shoes that are not a tax deduction are not needed and simply clutter your home or office. Unless you are trying to track your spending habits these receipts are not needed for tax purposes and you can safely TOSS.
HAPPY SHREDDING - MAKE SURE TO ALWAYS SHRED YOUR PERSONAL INFORMATION THAT CONTAINS YOUR NAME, ADDRESS, ACCOUNT NUMBERS TO AVOID IDENTITY THEFT.
RECYCLE YOUR SHREDDED PAPERS TO HELP THE ENVIRONMENT:)
Business receipts to Keep for Taxes
Business taxes are different than personal taxes. Some documents should be held for at least three years, others for ten years and some indefinitely. Each state has their own rules and your business accountant can assist you with the specifics for your type of business and the law however, these are the general guidelines to keep you safe.
ALL OF THESE TAX RECEIPTS AND DOCUMENTS SHOULD BE KEPT INDEFINITELY:
Licensing and permits
Year end tax return documents
SAVE THESE BUSINESS RECORDS FOR TEN YEARS:
Banking information including deposits and cancelled checks
SAVE THESE RECEIPTS AND TAX DOCUMENTS FOR THREE YEARS:
Credit card statements
General ledgers and notes
Inactive insurance policies
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Whether you file your taxes on time for April 15th or use the extension date of October 15th, you'll need plenty of time and organizers to get them done right. We love software that helps to organize tax receipts at a glance and it reduces all that clutter too!