Having your receipts in order can be the difference between a successful audit and hefty fines! If you don't have a receipt, the IRS can disallow an expense and they will determine that you’ve underreported your taxes. As a taxpayer, it’s your responsibility to keep all receipts-we suggest holding for 7 years-just in case you’re called on to produce them during an audit. Keeping receipts is crucial for many reasons-to be able to substantiate your expenses and make sure you’re claiming all the deductions you’re eligible for.
When it comes to organizing your receipts, being proactive is key. Properly tracking receipts can also help you discover potential tax credits you may be eligible for. To make sure your receipts are properly stored and organized, here’s what you need to do:
• Digitize Your Receipts: If you prefer to keep your own receipts at home, you can still digitally capture them by taking a photo with your smartphone or tablet. You can either store them on your device or use a document scanning service to store them in the cloud.
• Categorize Your Receipts: Grouping your receipts together by expense type or by time period helps you organize them and determine if anything is missing.
• Take Advantage of Software and Apps: You can now use software, like Quickbooks Online, to scan and store digital copies of your receipts. This will ensure that you have a complete digital record of all your expenses.
Very simply, keep all documentation, you just never know!