These Are the Receipts to Keep for Doing Your Taxes

Find out how to file receipts for taxes.

Gathering and saving receipts and tax documents is an important part of filing taxes. Whether you take the standard deduction or itemize deductions, most people filing their 2018 taxes in 2019 will be happy they took the time to prepare when the IRS deadline rolls around.

Review which receipts to keep for taxes — it will make tax preparation less painful and ensure you take all of your eligible deductions.

What Receipts Should You Keep for Taxes?

If receipts give you a headache, consider seeking the help of a tax professional. These experts assist taxpayers with complex financial situations and can help with calculating all types of taxes.

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.

Small-Business Owner Receipts

If you’re self-employed, you should consider using QuickBooks or similar accounting software, according to Bonnie Lee, an enrolled agent and owner of Taxpertise in Sonoma, Calif.

“The scope of an audit of a small business is reduced considerably when the auditor discovers that adequate books and records, checkbook reconciliation and all other bookkeeping tasks are being performed on professional software by a professional accountant,” said Lee.

If you’re wondering what receipts to keep for taxes as a small-business owner, make sure you save these documents:

  • 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. Save these purchase documents and receipts:

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

Discover: 10 Tax Loopholes That Could Save You Thousands

Business Expense Receipts

Your expenses are the costs of running your business, other than your purchases. Take some advice from an expert if you’re wondering what receipts to keep for business taxes.

Sometimes canceled checks are not enough to support a deduction, according to Lee. “A check made out to Costco is not proof of a business expense because you could be buying groceries and other personal items. Credit card charges for a business trip to Maui will smell like a vacation unless you can provide other documentation to support the business purpose. So be sure to keep the receipts, business conference flyers, etc. to defend business usage,” said Lee.

Keep these expense receipts for taxes:

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

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 entertainment, gift, transportation and travel 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 need the purchase receipts if you use depreciation on your business assets as tax write-offs.

Related: Take Advantage of These 16 Commonly Missed Tax Deductions

Tax Receipts to Keep

Business owners and sole proprietors aren’t the only ones who should be keeping receipts for taxes. Many taxpayers qualify for common eligible deductions that could require proof in the form of a receipt.

Keep these documents as well:

  • Records or receipts of minimum health insurance coverage requirements
  • Receipts for 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 an educator expense deduction
  • Supporting receipts and documents for eligible home improvement costs on real estate, such as those that qualify as medical expenses
  • Any documents that prove your cost basis for inherited or gift property
  • Receipts for medical expenses and dental costs — medical receipts for taxes can include payments for doctors, hospital stays and prescriptions not covered by your health insurance
  • Documentation showing tax-deductible donations totaling more than $250, only for charitable donations that exceed $250
  • Receipts for child care expenses if you’re a working parent or looking for a job
  • Student loan interest receipts
  • Energy-saving home improvement receipts

Learn: What Are Your Chances of Being Audited by the IRS?

How to Organize Receipts for Taxes

Whether you expect to pay taxes or get a refund, keeping receipts for taxes doesn’t need to become a complicated process. The key is knowing how to save receipts for taxes and filing them in an orderly fashion.

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 income tax return. If you prefer a more traditional route, save your receipts in boxes or files.

You can also find a ready-made receipt organizer or even use your tech savvy to operate a receipt scanner. No matter which tax receipt organization style suits you, arrange your documents by year and category.

Read: How to File a Tax Extension With the IRS

How Long to Keep Tax Records and Receipts

You should save general tax records for at least three years, according to Josh Zimmelman, owner of Westwood Tax & Consulting LLC in Rockville Centre, N.Y. “The IRS has three years to ask for an audit,” said Zimmelman. “But they can ask for records up to six years after filing if you failed to report 25 percent or more of your gross income.”

Another expert, Deltrease Hart-Anderson, an enrolled agent in West Columbia, S.C., gave an alternative perspective. “I tell both business and individual clients to save receipts for at least 10 years, but I add a disclaimer: If you have room, save them forever,” said Hart-Anderson. If the IRS feels that you’ve filed a fraudulent tax return, it can audit an indefinite number of years of your tax returns.

Take a look at everything you need to know about tax changes this year.

More on Filing Taxes

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About the Author

Barri Segal has 20+ years of experience in the publishing and advertising industries, writing and editing for all styles, genres, mediums, and audiences. She has been writing on personal finance topics for 12 years and gains great satisfaction from making a difference in consumers’ lives.