What Receipts for Tax Purposes Do I Need to Save?

When it comes to filing taxes, organization is key. One of the most important aspects of tax preparation is keeping track of your expenses throughout the year. This includes holding onto receipts for tax purposes showing various expenditures, which can help you maximize deductions and credits while also providing documentation in case of an audit. But what receipts do you actually need to save for tax purposes? Let’s break it down.

How to Know if You Need to Save Receipts

It’s important to note that not everyone needs to save receipts for tax purposes. For instance, if you take the standard deduction instead of itemizing deductions, you may not need to save receipts for certain expenses like medical costs, charitable donations, or home mortgage interest. Additionally, if your employer reimburses you for work-related expenses, you typically don’t need to keep receipts since you’re not claiming those expenses on your taxes. However, if you’re self-employed, a freelancer, a small business owner, or if you plan to itemize deductions, saving receipts is crucial to accurately report your expenses and maximize your deductions.

• Who Needs to Save Receipts:
  • Self-employed individuals
  • Freelancers
  • Bloggers
  • Small business owners
  • Individuals planning to itemize deductions
• Who Doesn’t Need to Save Receipts:
  • Those taking the standard deduction
  • Employees whose work-related expenses are reimbursed by their employer

Remember to consult with a tax professional to determine your specific requirements based on your tax situation.

Types of Receipts for Tax Purposes You May Need to Document

1. Income-related receipts: This includes any documentation related to your income, such as W-2s from your employer, 1099s for freelance work or investment income, and statements from rental properties or businesses you own.
2. Charitable donations: If you’ve made donations to qualified charitable organizations, you’ll need receipts or acknowledgment letters for these contributions. Make sure the receipt includes the name of the organization, the date of the donation, and the amount donated.
3. Medical expenses: While not all medical expenses are deductible, certain qualifying medical expenses can be claimed if they exceed a certain percentage of your adjusted gross income. Keep receipts for doctor visits, prescriptions, medical equipment, and other healthcare-related expenses.
4. Business expenses: If you’re self-employed or own a business, keeping track of business-related expenses is crucial. This includes receipts for office supplies, travel expenses, professional services, equipment purchases, and any other costs associated with running your business.
5. Homeownership expenses: If you own a home, there are several receipts you should save for tax purposes. This includes receipts for mortgage interest, property taxes, and any expenses related to home improvements or repairs that may qualify for deductions or credits.
6. Education expenses: If you’re paying for education expenses, such as tuition, books, and supplies, you may be eligible for certain tax benefits, such as the American Opportunity Tax Credit or the Lifetime Learning Credit. Save receipts and documentation for these expenses to claim these credits.
7. Childcare expenses: If you’re paying for childcare or daycare expenses in order to work or attend school, you may be eligible for the Child and Dependent Care Credit. Keep receipts or records of these expenses, including the name, address, and taxpayer identification number of the childcare provider.
8. Miscellaneous deductions: Finally, save receipts for any other expenses that may be deductible, such as job search expenses, investment expenses, tax preparation fees, and unreimbursed employee expenses.

While it’s important to save receipts for these expenses, it’s equally important to keep them organized and easily accessible. Consider using digital tools or apps to help you track and store receipts throughout the year. By staying organized and saving the right receipts for tax purposes you can ensure that you’re maximizing your tax deductions and credits while also providing accurate documentation in case of an audit.

This information is not intended as legal or tax advice. Cowdery Tax and its representatives does not offer legal or tax advice. We offer services for business bookkeeping, payroll, tax payments, and personal tax filings. We share information that is publicly available. Tax laws may change with or without notice that may alter or change the information contained in this publication.