When you itemize your deductions on your tax return, then you have to take the time to track your spending. If you don’t stay organized by itemizing your receipts throughout the year, you’ll be stuck in a crunch at tax time. With careful notes, you'll know exactly which receipts show deductible expenses and which ones you can toss.
Create a receipt storage envelope or clear page protector for each category of expenses that you incur, such as food, transportation or clothing. Place the envelopes or clear page protectors into a plastic storage box or 3-ring binder.
Make a note on each receipt as you get it to help you categorize your receipts. For example, if you pop for a business lunch, circle the amount and note “food” on the receipt with the red pen.
File the receipt in the proper envelope or page protector as soon as possible.
Transfer the information on your receipts to a spreadsheet at the end of each month. Use the first column for the expense category. Place the name of the business where the receipt came from in the second column. Enter the date of the receipt in the third column, and the amount of the expense in the fourth column.
Remove the month’s itemized receipts from the envelope or clear page protector and transfer everything to another more permanent storage container -- maybe an expanding file folder or another small plastic box with a lid. Store your receipts in this spot as a record of your spending. Use the itemized information on the spreadsheet when it's time to fill out your income tax form.
Items you will need
- Business size envelopes or clear page protectors
- Red pen
- Plastic storage box or 3-ring binder
- Spreadsheet software
- Expanding file folder or plastic box
- If you have a techie tendency, consider scanning receipts or even snapping a picture of receipts to digitize them. Once on your computer, you can create file folders similar to the category envelopes you created. File each scanned receipt in the applicable file folder and then transfer the information to the spreadsheet for inputting to your income tax return.
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