These Are the Receipts to Keep for Doing Your TaxesLearn how to organize and save your receipts for taxes in case of an IRS audit.

 

Whether you operate a small business as a sole proprietor or simply want to know how to maximize all the deductions to which you’re entitled, gathering and saving receipts and tax documents is an important part of preparing for tax filing.

Knowing which tax documents and receipts to save can help you take all of your eligible deductions. Here are the receipts you need to keep for your taxes and why.

Small Business Owner Receipts

If you’re a small business owner, keeping expense receipts and supporting business documents should become part of your daily routine so you aren’t scrambling to find them at tax time. It’s important to keep these receipts and documents because they support the information you include on your tax return. But the question remains, “What receipts do I save for taxes?” Here’s the answer.

Supporting business documents include:

  • Sales slips
  • Paid bills
  • Invoices
  • Receipts
  • Deposit slips
  • Canceled checks

Keep your gross receipts because they show the income for your business, which you must include when you file your taxes. Gross receipts to save for taxes can include:

  • Cash register tapes
  • Deposit information
  • Receipt books
  • Invoices
  • Form 1099-MISC

Don’t forget to save your receipts for purchases, which are classified as the things you buy and resell to consumers. Purchases might include:

  • Canceled checks or receipts that show the payee, amount and proof of payment
  • Cash register tape receipts
  • Credit card receipts and statements
  • Invoices

Find Out: 6 Most Important Tax Deductions You Need to Claim

Business Expense Receipts

Your expenses are the costs — other than your purchases — of running your business. Keep these expense receipts for taxes:

  • Canceled checks
  • Cash register tapes
  • Account statements
  • Credit card receipts and statements
  • Petty cash slips

Keep all of your credit card receipts and statements, invoices and cash register receipts. You’ll need them to maximize your tax deductions for eligible travel, entertainment, gift and transportation expenses.

If you sell any business assets — such as the real estate, furniture or machinery you use — you’ll need to keep the purchase and sales agreements as well as your receipts. You’ll also use the purchase receipts if you write off depreciation on your business assets.

See: 10 Commonly Missed Tax Deductions

Other Tax Receipts to Keep

Business owners and sole proprietors aren’t the only ones who should keep receipts for tax time — many other taxpayers might also qualify for eligible deductions that could require proof in the form of a receipt. Make sure you hang on to the following:

  • Records or receipts of minimum health insurance coverage per the Affordable Care Act or documents showing you qualify for an exemption or premium tax credit
  • Receipts for non-deductible contributions to a traditional individual retirement account
  • Supporting documents or receipts for worthless securities or bad debts if you write these off as losses
  • Receipts for payments made to household employees
  • Receipts to prove you qualify for any special tax benefits you claim, such as a first-time homeowner credit
  • Supporting receipts and documents for home improvement costs on real estate that will result in a taxable property sale
  • Any documents that prove your cost basis for inherited or gift property
  • Medical and dental expense receipts, including payments for doctors, hospital stays and prescriptions not covered by your health insurance
  • Documentation showing charitable donations totaling more than $250
  • Child care receipts for day care and after-school care if you’re a working parent or looking for a job
  • Student loan interest receipts
  • Receipts for expenses incurred as part of a job search or for moving for a job
  • Energy-saving home improvement receipts

How to Organize Receipts for Doing Your Taxes

Whether you expect to pay taxes or get a refund, keeping your receipts for taxes doesn’t need to be complicated. The key is knowing how to organize and file receipts for taxes. The IRS has accepted scanned receipts since 1997, and there are plenty of tools and resources you can use to make your record-keeping easier.

Maintain paperless records by scanning receipts and records or use an app like Expensify to photograph receipts with your smartphone and categorize them. Doing this will simplify the process of listing your itemized deductions when you fill out your tax return.

If a traditional route is more your style, save your receipts in a box or files. Whichever tax-receipt organization style suits you, arrange your documents by year and category. For example, keep 2016 receipts together, but file your 2016 business entertainment receipts in one folder and your 2016 transportation receipts in another.

How Long You Should Keep Tax Records

To be on the safe side, keep your tax records for a minimum of three years or whenever the statute of limitations runs out for filing returns or refunds, whether you’re claiming personal deductions or keeping receipts for business expenses.

The statute of limitations is the time during which the IRS can assess additional taxes and you can change your tax return or claim a credit or refund. Visit the IRS website for details.

Learn: 30 Ways to Prevent a Tax Audit

If gathering and organizing receipts is simply not for you, you might need the help of a tax professional. A tax professional provides help for taxpayers with complex financial situations and can assist with calculating payroll, capital gains, corporate, and federal and state gift, real estate, and estate taxes. Getting expert tax advice also might be wise if you owe back taxes or have a complicated tax situation.

Whichever route you take, make sure you do something to organize and save your tax receipts — the last thing you want is to not have the documents you need to defend yourself during an IRS audit.