People usually wait until close to tax day to start frantically looking for their receipts. However, if you want to be ready to file taxes for this year and every year after that, then it’s important to organize your receipts.
There are multiple benefits, such as saving you time and helping you to keep track of every important transaction. It’s also much easier to plan for tax day.
So to begin, you’ll need to track down each receipt you still have.
Common Places to Find Your Receipts
It’ normal to just mindlessly toss or shove these little pieces of paper somewhere after you made your transaction. Luckily, other people leave their receipts in the same kinds of places you do. Here’s where you can start searching:
- desk drawers
- filing cabinets
- shoe boxes
The receipts you obtain must be for the current tax year. Once you’ve gathered all of your receipts, you can start organizing them.
Group by Type of Expense
Anyone who is self-employed or an entrepreneur must fill out the Schedule C IRS form. This divides deductible expenses into categories; the same kinds of categories you can organize your receipts.
These sections include:
- office expenses
- car and truck expenses
- legal and professional services
- repairs and maintenance
- travel, meals, entertainment
Even if you don’t have to fill out Schedule C, you could still organize your receipts in these categories. The IRS may one day audit you. You’ll be able to easily find your receipts to show them as proof of tax deduction.
Having a physical copy of your sales slips is significant in its own right. Nonetheless, utilizing receipt management technology can make cataloging your receipts much easier. Use tools like Lemon to scan your physical receipts and organize them electronically.
Infographic created by Lemon.com (site is down as of this writing).