Receipts! We find them jammed in our purses, cluttering up the kitchen counters, tucked in junk drawers and at the bottom of our grocery bags.
So how do we handle these annoying slips of paper? Do we just throw them all away?
I like that option (and I’ll be honest that’s what I do).
But… But what if you need them!
Maybe you will need to return that polka dot blouse you bought, or maybe you will get that dreaded AUDIT and need to find proof of all your expenses.
How do you know which receipts to save and which to toss?
Many receipts can be tossed immediately. But there are 4 good reasons to save receipts.
1. In Case of Return
If you think you may need to return an item go ahead and keep the receipt for 30 days. I love how Amy of Homestead Revival organizes her receipts. She uses 2 jars, one for the current month and one for the past month. Her method is so simple and perfect for anyone who wants to keep physical receipts (we will talk about scanning receipts digitally later, but this is great for receipts you are only keeping 1 month).
The second reason you may want to keep receipts is for budgeting purposes.
2. To Budget
If you are saving receipts to record and budget try to keep your budget updated frequently. By dealing with your receipts quickly you shouldn’t have to save them longer than 30 days.
3. For Medical Reimbursment
If your insurance plan offers a FLEX spending account you may need to send in medical receipts for reimbursement. In this case, any receipts should be sent in within the month. If you scan and fax your receipts you can save a digital copy of them on your computer and toss the paper copy.
The fourth reason for saving receipts is the largest and most daunting…
If you take your standard deduction rather than itemizing deductions you may not need to save receipts for tax time, but many people do have to save certain receipts for tax purposes.
If you are claiming childcare expenses, medical expenses, charitable donations, or self employment expenses you need to save your receipts.
Since you will need to save these receipts longer than a month (in most cases for 3 years) I highly recommend going digital! Barbara from Simplify My Days has a great tutorial on how to use a free App, Evernote to digitize your receipts. With the app you just take a photo of your receipt on your phone. I love this easy method that doesn’t even involve a scanner or computer!
Whether you decide to digitize your receipts or keep hard copies it’s a good idea to organize them by category, you can do this with folders online or a physical file box.
Separate your receipts into categories to make things easier at tax time.
- Childcare expenses
- Un-reimbursed medical expenses
- Charitable donations
- Self-employment expenses
- Travel and entertainment
- Legal Services
- Tech Maintenance and Repair
- Office Supplies
So there is a basic look at how to handle receipts. If you don’t need your receipts for returns, budgets, medical reimbursements, or taxes THROW THEM AWAY. If you need receipts for returns, budgets, or medical reasons keep them for 30 days. And finally for taxes try to digitize and save for 3 years.