It is necessary to keep track of all your receipts so you can adequately report your expenses on your taxes.
Have you ever tried searching for a single receipt in a mountain of documents? Depending on your job or business, you could have to manage hundreds of receipts and papers. It is necessary to keep track of all your receipts so you can adequately report your expenses on your taxes. We know how overwhelming it can be to organize stacks of documents on your own. Here are a few tips for organizing your receipts for tax season.
Categorize Your Receipts
It can be difficult to find a spot for each slip of paper you receive, especially when you have many other loose documents lying around. Using file folders is a tried and true method to stay organized, and it’s very efficient. Grab several file folders in different colors and label them by category. Then, when you receive a bill, receipt, or any other kind of tax document, make it a habit to put it in its category immediately. This will keep your records organized and prevent any from getting lost.
Take Pictures of Documents
We live in the age of technology, and it is easier than ever to keep track of important documents. Use your phone to take a photo of every receipt issued, so if you misplace the paper copy, you still have a record. The IRS now accepts scanned or digital receipts for tax purposes. This is the easiest way to use your phone for tax purposes, but many apps are out there to help you scan and track your expenses.
Make Notes on Receipts
Writing notes directly on your receipts is a great way to help you remember exactly when you made that purchase and for what purpose. This is especially useful when it comes to entertainment and dining expenses. For some expenses, you may be required to report who attended the meeting, the total paid, and the purpose of the meeting. Be sure to note any important details directly on the receipt, then put the receipt where it belongs right away, so you do not miss any expenses when you file your taxes.
How Long Should You Keep Receipts?
As a general rule of thumb, you should keep your federal tax records for three years after you file. The IRS has unique guidelines on when you might need to hold onto your documents for longer. Also, the IRS can audit you up to six years back, so it might be a good idea to hang on to your files for a bit longer. Be sure to check the IRS guidelines for your state and business classification.
Contact Bowman & Company CPA Today
Bowman & Company CPA, PC provides all of our individual and small business customers with experienced, accurate, and affordable financial services. Our financial services aim at decreasing your taxes and increasing your net worth through responsible, timely, and accurate recordkeeping. We offer our services to clients throughout the Washington, D.C. metropolitan area including Maryland and Baltimore County, Columbia, and Howard County. For more information on our offerings, contact us online or call us at (410) 381-8121. You can also find us on Twitter, Linkedin, Facebook, and Youtube.