Do you itemize your income tax deductions? Here are some tips on how to organize and track your tax receipts!
Do You Itemize Your Income Tax Deductions?
I’m one of those people who itemizes my tax return, and I’ve got the same concerns that many others have who go through the process of itemizing tax deductions. When it’s time for me to sit down to do our taxes, it’s not uncommon for me to wonder where my receipts have gone or wish that I should’ve held on to certain documents. I can imagine how this problem is greatly compounded once you own a small business and have to keep receipts for both the home and office.
Running things this way can be pretty frustrating, so I’d like to take some steps to make tax preparation a lot easier going forward. What are some of the things that we can do at this point in order to be better prepared for the tax season?
How To Track Tax Receipts When You Itemize
1. Check out some creative uses of the IPod Touch or IPhone.
If you do, then there are numerous applications that you can use to keep track of your tax information. For instance, you can save your deductions on your calendar, on the notepad app, or one of the many financial apps available for a fee (e.g. the JetSet iPhone expense tracker). Of course, this can work as well on any PDA, or on any of those free online personal planners, so think about what kind of organizational method works best for you.
2. Use a scanner.
Saving receipts — easy as it sounds — is one of those things a lot of people (including myself) also find easy enough to forget to do. Some of us aren’t too well organized so if I’m describing you, then I’d strongly suggest that you use a scanner to keep track of your paper receipts. Once you scan in your receipts, make one file that holds all of them. Even if you aren’t sure that something will count for a deduction, scan it anyway.
Also consider spending a couple of dollars per month and sign up with one of those remote storage services. Save your scanned information online and back up your data (using the storage service) so you don’t have to worry about losing receipts. Remember to keep your receipt files for at least a decade in case the IRS wants to see proof.
3. Take a look at ItsDeductible.
I had been using a book called It’s Deductible in the past to determine the value of my charitable donations, but unfortunately, I no longer see this book available (though I may not be looking hard enough). But I see that It’s Deductible is now actually available online. This is a great service from the makers of TurboTax, and it’s FREE!
It allows you to track your charitable donations and accurately values those donated items. Not only that, you can import this information easily into TurboTax, a plus if you own this software (check out our Turbo Tax review). Throughout the year, as you donate shirts, shoes, cars, cash, or anything else, you can log in and add an entry into ItsDeductible. It’s a great way to see how your tax deductions can add up!
4. Own a business? Then save everything!
Don’t be choosy. Don’t overthink. Save every receipt for the year. Small business deductions come in all shapes and sizes. Do you have a home office? How about that utility bill? How about those home renovations? Without the receipt you can’t deduct it. The worst that happens at tax time is that you have a lot of receipts to put in the shredder. Sounds like a good problem to have? Check out these tips on claiming your tax deductions for business and charitable contributions.
5. Own a company car? Make sure you track gas expenses and mileage.
If you’ve got a company car, then tracking your mileage and your gas expenses is something you’ll want to keep on top off. You may want to check out an iPhone or iPod Touch application like Milebug for this purpose.
If you’ve got good credit, then one way to make tracking your gas expenses simpler is to put your spending on credit using one of the best gas credit cards, best cash back credit cards or rewards business cards available out there — you’ll get rewards for spending on gas while also getting the information on record.
Tracking Your Expenses and Organizing Your Tax Information
Tracking expenses can become a pain if you let it, but sites like Xpenser.com or Paybackable can help keep your expense information in one place so you don’t have to remember to scrounge for it at the end of the year. Those of us with busy lives have learned not to rely on our memory.
For many of us, activities like tax planning, organization and preparation aren’t some of the best loved parts of our lives but remember that you may lose a lot of money by not being as organized as you should be with your receipts and documents. Wouldn’t it be great to be able to maximize your deductions, receive a refund and then build an emergency fund with all of the extra money you saved in 2009?
Any more ideas on how to track receipts, organize your tax documents and get ready for tax season?
This guest post was brought to you by Tim Parker.
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