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| *The Commerce Journal>>>Other Taxes |
Taxes- why do you save receipts? |
I've never filed before (have to this year).. And I understand that certain things you can deduct etc.. and you want to have the receipts in case of an audit.. But like, what receipts do you save and what can you write off? Well, you should investigate, ask people from the government who work with those things or ask the person in charge of the payroll in your job. Because you have to do this procedure when you earn a specific amount of money per month or year. And depending on that you have to keep receipts regarding to medical visits, medicine, education, donations, etc. at least this is the way we do it in my country and believe me that it's a pain on the neck to be keeping those things and sometimes they don't pay you back those things but at least here in my country, when you write off something, after you fill that form and after they chack it, they contact you and they tell you that you avoided an income! That's awful but anyway, try to keep at least doctors' receipts, medicines' receipt, education receipts' but make sure it's necessary to keep them because here it's not mandatory, those just help you to get a little bit more money back. Good luck with that thing. . .be good and take care! Source(s): Personal experience Save receipts from any and all charitable donations, if you have a job the requires you to be on call 24/7 you can deduct part of your cell phone bill so save your bills. If you work out of your home you can deduct some of those costs as well. Find an accountant and talk to them about what you should holding on to. It will help you out in the long run. Been holding these things every year. You can't really write anything off. What you would want to save receipts for is if you had a Schedule C business or Schedule F (Farm) business. Also, you can deduct certain expenses on Schedule A - Itemized Deductions, but the total itemized deductions have to exceed your standard deduction for itemizing to give you a benefit. Itemized Deductions are as follows: There are a number of allowable deductions: Medical expenses, to the extent that the expenses exceed 7.5% of the taxpayer's AGI. (e.g., a taxpayer with an AGI of $20,000 and medical expenses of $5,000 would be eligible to deduct $3500 of their medical expenses ( 20,000 X .075 = 1500; 5000 - 1500 = 3500 ).) The 7.5% floor means that most taxpayers are unable to take advantage of the medical expense deduction. Allowable medical expenses include: Payments to doctors, dentists, surgeons, chiropractors, psychologists, counselors, physical therapists, osteopaths, podiatrists, home health care nurses Premiums for medical insurance (but not if paid by another, or with pre-tax money) Premiums for qualifying long-term-care insurance, depending on the taxpayer's age Payments for prescription drugs and insulin Payments for devices needed to treat or compensate for a medical condition (crutches, wheelchairs, prescription eyeglasses, hearing aids) Mileage for travel to and from doctors and medical treatment Necessary travel expenses Non-deductible medical expenses include: Over-the-counter medications Health club memberships (to improve general health & fitness) Cosmetic surgery (except to restore normal appearance after an injury or to treat a genetic deformity) State and local taxes paid, including: Income taxes (or, alternatively, state and local general sales taxes[1]) Property taxes (assessed by reference to the value of the property) but not including: Use taxes Excise taxes Fines or penalties Mortgage interest expense on debt incurred in connection with up to two homes, subject to limits (up to $1,000,000 in purchase debt, or $100,000 in home equity loans) also, points paid to discount the interest rate on up to two homes; points paid upon acquisition are immediately deductible, but points paid on a refinance must be amortized (deducted in equal parts over the lifetime of the loan) Investment interest, up to the amount of income reported from investments (the balance is deferred until more investment income is declared) Charitable contributions to allowable recipients; this deduction is limited to either 30% or 50% of AGI, depending on the characterization of the recipient. Donations can be made as money, or in the form of goods. The value of donated services cannot be deducted as a contribution. Reasonable expenses necessary to provide donated services can, however, be deducted (such as mileage, special uniforms, or meals). Non-cash donations valued at more than $500 require special substantiation on a separate form. Non-cash donations are deductible at the lesser of the donor's cost or the current fair market value. Eligible recipients for charitable contributions include: Churches, synagogues, mosques, other houses of worship Federal, state, or local government entities Fraternal or veterans' organizations Non-eligible recipients include: Individuals Political campaigns or political action committees (PACs) Casualty and theft losses, to the extent that they exceed 10% of the taxpayer's AGI (in aggregate), and $100 (per event) Miscellaneous expenses related to the production of income or the calculation of taxes, to the extent that they exceed 2% of the taxpayer's AGI, including: Job-related clothing or equipment, such as steel-toed boots, hardhats, uniforms (if they are not suited for social wear: suits and tuxedoes are not deductible, even if the taxpayer does not like to wear them, but nurses' and police uniforms are), tools and equipment required for work Unreimbursed work-related expenses, such as travel or education (so long as the education does not qualify the taxpayer for a new line of work; law school, for example, is not deductible.) Fees paid to tax preparers, or to purchase books or software used to determine and calculate taxes owed Gambling losses, but only to the extent of gambling income (For example, a person who wins $1,000 in various gambling activities during the tax year and loses $800 in other gambling activities can deduct the $800 in losses, resulting in net gambling income of $200. By contrast, a person who wins $3,000 in various gambling activities during the year and loses $3,500 in other gambling activities in that year can deduct only $3,000 of the losses against the $3,000 in income, resulting in a break-even gambling activity for tax purposes for that year -- with no deduction for the remaining $500 excess loss.) Itemized deduction items would be something else that you might want to save receipts for, as they would be acceptable proof to the IRS for the deductions. You might be better served by posting this under the specific Country that you live in, and then people can answer based on the tax rules where you live. Here in Canada, you keep the receipts 6 years plus the current year. The general guideline to deduct something is it the money has to be spent to earn income. Sometimes the deduction is in the form of Capital Cost Allowance, and at other times you deduct the entire amount of the expense. What you can deduct depends on whether you are an employee or are self-employed, as well. Check out CRA's website for more infomation: http://www.cra-arc.gc.ca |
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