Keeping control of your finances is easier said than done. That’s why many people do the bare minimum: they stick to their budget, save a small percentage of their salary each month, and file their taxes once a year. But if you really want to get ahead, you need to do more, and that includes saving receipts where appropriate. Here, accountants and financial experts tell us the types of receipts you should always keep. It will save you time, headaches and potentially even thousands of dollars in the long run.
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Keeping receipts for self-employment expenses will save you hours (and dollars!) on tax day. “Many of the costs you incur when working for yourself, such as those related to marketing, office expenses, insurance and travel, can be written off when you file your taxes,” says Steven Wilson, founder of the personal finance site hyphen. “Utility costs and the costs of running a home-based business could also be covered.” To set yourself up for success, keep track of all energy bills, rent payments, mortgage information, and receipts for business-related purchases.
In the event of an audit, you’ll also want to keep them for the long term (the IRS can go back as far as six years in certain circumstances). “If you are audited, a lot of the impact will depend on who [your auditor is] and whether they are prone to be nice or prone to be difficult,” says Ryan Reiffert, business and estate planning lawyer and founder of Law Offices of Ryan Reiffert, PLLC. “If they’re prone to being picky, having a huge stack of receipts to back up as many genuine business expenses as possible will go a long way to preserving those deductions and saving you money.”
A major purchase can be something as big as a dishwasher or as small as an investment bag. “These receipts can be used to return an item if it is faulty, to get a refund if the item is not what was expected, or to exchange the item for something else,” explains Michael Ryan, financial planner and founder from the financial literacy website Michael Ryan Money. “Large purchase receipts can also be used to prove ownership of an item in the event of a dispute.” Easily keep track of these receipts by scanning them or sending them to a specific folder in your email.
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If your purchase is covered by a warranty, you should always keep the receipt for as long as the conditions apply. “These receipts can be used to get a refund or replacement if an item breaks or doesn’t work as expected,” says Ryan. “Warranties and guarantees can also be used to obtain free repairs.” For example, Ryan notes that his water heater was guaranteed for life. “I saved $1,500 by being able to retrieve the receipt from 13 years ago,” he notes.
Whether it’s plumbing work done on your home or mechanical work on your car, you’ll want to keep the receipt. “These receipts can be used to get a refund or credit if a repair isn’t done properly or service isn’t up to par,” Ryan says. “They can also be used to get a discount on future repairs or services.” Again, you’ll want to scan those receipts because you might not realize you need a refund for years after the initial work.
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This is another receipt you can use for your taxes, and you don’t even have to be self-employed. “Child care or dependent care expenses paid to a babysitter, daycare center, day camp, after-school program, or other care provider may be eligible for a credit. tax,” Wilson says. “Additional costs, such as the cost of a nanny, cook, or housekeeper hired to provide services or care to your child or dependent, may also be eligible if the care are provided at your home. These charges only apply if you paid for the services to work or seek employment. Ask your accountant if you qualify.
According to the IRS, you can deduct contributions money or property donated to qualified charities. To do this, however, you will need to itemize your deductions, which means showing your receipts. Most people can deduct up to 50% of their adjusted gross income. Redirect money to a charity in need? Sounds like a win-win.