How long do i need to keep tax receipts

how long do i need to keep tax receipts

Debbie Williams is an organizing strategist and founder of OrganizedTimes.com. She is the author of "Common Sense Organizing " from Champion Press.

Dealing with Receipts

Question: What do I do with my millions of receipts? How long should I keep them?

Samantha

Answer: Receipts, like other papers in our life, do seem to multiply don't they! Depending on what the receipt is for, there are simple ways you can store, organize, and retrieve the receipts that you receive every day.

I recommend that you put your receipts in one place to create a simple organizing system. Whether you carry a #10 envelope or a fancy accordion file, creating a home for these paper slips is crucial to managing your paperwork. Each time you make a purchase at a grocery store, visit your pharmacy, or dine out, tuck that receipt into your envelope. Keep the receipt in your purse, briefcase, or in the junk drawer of your kitchen. But do use it on a regular basis so that you know where all your important documentation is at all times.

Everyone has the need for a different system, but none of them have to be complex. If you make all your purchases using cash, just keep receipts a week or so and toss those that do not involve tax records, utilities or warranties. A good example of tax records is taking out a client for a business lunch - you will need that receipt as documentation for your income tax deductions. The receipt for that pair of sneakers your son just had to have should be held onto for a short time to make sure he really is going to wear the things. And keep the receipt for your appliances and electronics until the warranty expires, then toss them. Consumables such as groceries and restaurant bills don't need to be

retained unless they are business-related.

If you use a credit card (or several) hold onto your receipts to reconcile with your monthly statement. Then toss the ones that do not need to be retained, as I explained earlier. You may want to write on the back of the receipt Business or Personal so that you know where to file your receipt at a later time. And around holiday season or birthdays, it sure wouldn't hurt to write the name of the recipient on the back in case they need to return the gift.

Hang onto receipts for utilities approximately a year, and tax-related items for 7-10 years. Check with your accountant to verify these time periods, as the advice seems to vary from expert to expert. This is just a guide for you, and I recommend that when in doubt, don't throw it out. Better to have it organized and accessible than panic prior to a tax audit.

( The IRS accepts scanned receipt images as well as paper documents. The NeatReceipts Scanner can be a huge time saver as well as paper saver. It comes with handy software to categorize and store your receipts. )

Get into the habit of routinely purging and filing your receipts on a regular basis, either monthly or quarterly. And at the end of each year, make a point of pulling old receipts from your current files in the file cabinet and archiving them. Once again, the system of filing your receipts doesn't have to be fancy, just consistent. Moving receipts from a shoe box (current files) into a larger box (archives) at the year's end may be all you need to do to make room for the new year's papers. And it sure saves on your filing space!

Good luck,

Debbie Williams

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Source: www.bluesuitmom.com

Category: Taxes

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