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Andrew Mellen

Sunday, December 11, 2011

Receipts to keep

 I am asked all the time about receipts -- what to keep and how to file them.

We'll look at what to keep first.

As a rule, there are only six (6) kinds of receipts that you need to keep:
 
1) Capital improvements to a piece of real estate you own. These may be added to your cost basis when selling to reduce any taxable profit you may show.

2) Major purchases, such as appliances, equipment, etc.  And if you ever want to call the manufacturer for technical support, go online within the first 30 days of ownership and register your purchase. They may demand proof of purchase when you first call in and if you haven't registered, you may need to fax or email them your receipt at that time.

3) Service and repairs to either your home or vehicle. A full record of service performed demonstrates your thoughtfulness and thoroughness when selling these kinds of assets. You will be in a better position to negotiate if you can show the care with which you've maintained these assets while in your possession.

4) Tax-deductible expenses. These are expenses that will be reflected on your tax return, either on a Schedule C or other form.

5) Reimbursable expenses. These are purchases that you made on behalf of someone else or are otherwise entitled to  submit to an employer, client or friend to recapture your expenses.

6) Items you are not yet committed to keeping and may return to the store. After the window has closed for these purchases to BE returned, unless the item also falls under one of the above categories, shred it.
We'll look at how to file them tomorrow.

You can certainly store them before filing in something like this ... but I would suggest NOT allowing them to accumulate to this degree before filing!