Taking Income Tax Deductions? Track Tax Receipts When You Itemize

by Tim P. on 2009-02-098

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.

income tax deductions, tax receipts, itemize, tax returnsImage by Phillip

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.

Copyright © 2009 The Digerati Life. All Rights Reserved.

{ 8 comments… read them below or add one }

JEM February 10, 2009 at 1:24 pm

Can you use your cc statement as a receipt?

Silicon Valley Blogger February 10, 2009 at 2:15 pm


Thanks for your question. Let me first say that we are not tax professionals here. I’d encourage you to check with your tax professional about this.

Personally though, I always assumed that using financial statements for IRS purposes was valid, but the important thing is that the statement needs to be very specific about who the merchant is from where you purchased something. If it is unclear, it may not be considered valid by the IRS. Here is some discussion on this.

If anyone has a definitive response to this question, we’d very much appreciate it!

addie meade June 5, 2009 at 5:06 am

how much can i give to my childern, with out being taxed. pltase answer, thanks

Silicon Valley Blogger June 6, 2009 at 12:36 pm

The gift tax limit for 2009 is $13,000 per year per person.

Rahila January 24, 2010 at 3:58 pm

Wow, Xpenser is nice. Wish I’d known about it in 2009…

Sam January 13, 2011 at 1:01 pm

I am thinking about doing my taxes myself this year because my cpa take a certain % of my return back and it starting to get expensive.If I was to do my own taxes what are the chances of me to get audited, and how would i go about do this by myself?

Big T October 10, 2011 at 8:25 am

Sam, you might want to find another CPA. My understanding is that they shouldn’t be taking a % of your return but rather a flat rate. If you are keeping good track of your deductible expenses then you shouldn’t have to worry about getting audited since if you are… you will have everything you need to back up your deductions. I’ve been using TAX Organizer to help me with backing up and catagorizing my expenses. Loving it.

Nita October 18, 2012 at 5:22 am

There are companies that do all the work for you now. All you have to do is get your receipts to them.

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