Lessen the burden of itemization at tax time by spending a little time each month categorizing your credit card charges. The Internal Revenue Service allows you to deduct certain expenses to lessen your tax liability. However, you must know what you paid for before you can claim it on your taxes. While you can purchase accounting software that will keep track of your charges, you can make a spreadsheet that will do the same thing.
Open the spreadsheet program on your computer and start a new spreadsheet. If you do not have a program, you can download a free program online (one option is Apache OpenOffice).
Make a column for each category you wish to track. While the categories that you choose are up to you, the IRS provides a list of deductible expenses such as medical and dental, interest, educational expenses and charitable contributions. Break down your categories even further if you want to know specifically where your money is going. For example, break the broad category of medical and dental expenses into subcategories for each physician you use and medical expense you have.
Include a column on your spreadsheet where you can list the reason for the expense. For example, if you have a column for prescriptions, list what prescriptions you charged in your "Description" column.
Look at the charges on your credit card statement and assign each to a category on your spreadsheet.
Make a row on your spreadsheet for each date on your statement. List each date that you used your card and insert the amount into its corresponding column.
Make a "Total" row for each month. Add the charges for each column and put the total in this row. Your spreadsheet can total the columns for you using formula calculations. Click on the box where you want the total to appear and press the function symbol ("fx"). In Microsoft Excel, "fx" is right beside the formula bar. Select the "sum" function and hold down the "Ctrl" key while selecting each box you want to include in the total. Press "Enter" for the total to appear in the box for your monthly expense.
Add the totals for each month to determine how much you spent in each category during the year.
- Tracking your charges not only helps you at the end of the year, but also when you are making a budget. The spreadsheet allows you to make as many columns as you choose, so you can see exactly what you are purchasing with your card.
- According to JD Fletcher & Associates, using separate cards for business and personal expenses can help avoid problems at tax time.
Specializing in business and finance, Lee Nichols began writing in 2002. Nichols holds a Bachelor of Arts in Web and Graphic Design and a Bachelor of Science in Business Administration from the University of Mississippi.