Keeping tax receipts sounds pointless. However, it’s much more important to hang onto the documents you’ll need when tax time rolls around. In some cases, there are plenty of copies that you won’t have to keep if they are no longer valid. That said, some paperwork will help you fill out your tax forms as efficiently as possible. Read on to learn more.
Documentary Evidence You Need to Keep
There are many tax receipts that you should retain. At least for the time being. That’s because the IRS requires you to furnish so-called “documentary evidence” regarding tax credits and deductions. Those expenses are highly specific and include the following items:
- Charitable contributions
- Medical bills
- Travel/transportation receipts for medical appointments and treatments
- Weight-loss program bills
- Office expense receipts
While there are many important receipts, these are the most notable examples that you should track down and organize, so nothing slips through the cracks.
The Receipts You Won’t Need
Getting rid of the receipts you no longer need isn’t as simple as it sounds. One unfortunate reality of this aspect of recording taxes is that not much counts. On the other hand, client entertainment and overnight travel are minor exceptions. Expenses below $75 are considered unimportant; lodging receipts are not. You should keep those so you can track your cash flow in both directions.
Pertinent Information and Details
Information is knowledge. Knowledge is power. Every receipt you catalog needs to include amounts, dates, places, and type of expense. Other evidence such as canceled checks and credit card bills are also helpful. That said, they must be related to business transactions to count.
Scanned Versions and Photographic Images
Since digital filing is convenient, old-school tax completion methods are beginning to disappear. As such, electronic submissions are the way to go. They are easier and faster to deal with and will make your CPA’s job easier to boot.
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