Which Receipts Should You Keep for Tax Write-offs?
Now that a new year has arrived, many of us find ourselves worrying about how many deductions we can scrape up for the IRS, and which receipts we need to support those claims. But the first question you must ask yourself is whether you plan to take the standard deduction. If you do, then you needn’t bother keeping any receipts at all — this “lump” deduction takes the place of any itemization. Current standard deductions total $6,100 for single filers and separately-filing spouses, $8,950 for heads of households, and $12,200 for joint-filing married couples. If you have reason to believe you can get more of a tax break through your real-world itemized deductions, however, then you’ll have to prove that you actually spent what you spent on transactions that actually count toward legitimate expenses. If you’re ready to tackle the extra effort, then let’s look at some of the deductions that commonly require receipts:
Sales tax – Did you pay substantial state or local sales tax on a big-ticket item such as a car, boat, et cetera? If so, then you’ll definitely want to keep the receipt on that transaction so you can deduct those taxes.
Self-employment and home office expenses – If you maintain an office, keep receipts for all relevant expenses such as pens, paper, printer cartridges and other common needs. Larger office items such as computers, printers or furniture may need to be depreciated, but you’ll still need to hang onto your proof of purchase for them. Don’t forget to collect your receipts for utility, mortgage or rent payments, because the IRS allows you to deduct the percentage of those expenses that accords with the percentage of your home reserved for office space. For example, if your home office takes up 16 percent of your home’s total square footage, you can deduct 16 percent of your total utilities.
Other work expenses – even if you work for somebody else, you can still claim deductions on any work-related expenses for which you never received reimbursement. For instance, did you have to purchase special protective clothing for your work, or were you required to buy training materials or attend classes out of your own pocket? Always keep receipts for any items that you had to buy in order to perform your job properly. (Of course, if you were reimbursed, then technically those deductions belong to your employer, not to you.)
Personal care – Did you have any out-of-pocket medical expenses during the tax year? Those doctor bills, drug purchases, therapy sessions or parking/transportation expenses all count, as do any insurance premiums you paid with after-tax dollars, so keep scrupulous documentation of these transactions. If you have dependents who are disabled and/or under the age of 13, you can also deduct your expenses for these individuals’ non-medical personal care.
Talk with your CPA to determine whether these or other deductions make sense for you — and if they do, file receipts for each relevant expense and keep them for however long you may need to prove your point to the IRS. You’ll be glad you did!
Sources: https://turbotax.intuit.com/tax-tools/tax-tips/General-Tax-Tips/The-Art-of-Keeping-Receipts-for-Your-Taxes/INF17891.html; http://www.forbes.com/sites/kellyphillipserb/2013/01/15/irs-announces-2013-tax-rates-standard-deduction-amounts-and-more/; https://turbotax.intuit.com/tax-tools/tax-tips/General-Tax-Tips/Which-Receipts-Should-I-Keep-for-Taxes-/INF22234.html
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