Tax time is never fun. Even if you are expecting to get some money back, you still have to jump through hoops finding your records and then filling out the forms. If you’re like most people, a full year of spending is now crammed in a shoe box with “Receipts for 2017 Taxes” scrawled on the side. No one wants to sort through that much paper.
There is a better way. One that will reduce your stress and potentially keep more money where it belongs, in your bank account. And it only requires a minimal investment in five cardboard boxes.
Why You Should Prep Your Receipts for 2017 Taxes
Every year thousands of people leave money on the table when they do their taxes. How? By taking a standard deduction without even trying to see if itemization would be better. In some cases, this oversight can cost you thousands of dollars.
So why are people so quick to check the standard deduction box? Often it is a result of poor planning and bad record keeping. Sure, it would be nice to save money. But, if you don’t have receipts, or if your filing system is a moving box overflowing with thousands of wrinkled receipts, itemization can seem a bit overwhelming.
This year, the standard deduction for married couples filing jointly is $12,700. It seems like a lot of money, but if you own your own business or have incurred significant medical expenses, this is not a hard number to beat through itemization.
Prepping your receipts for 2017 taxes is fast, easy, and can provide more benefits than just reducing your tax burden. It is also a great way to monitor your spending and establish a household budget. Vacation planning and pulling the trigger on major purchases is far less stressful when you absolutely know you can afford it.
How to Get Organized and Stay That Way
The key to itemization is saving your receipts. All of them. By the end of the year, you will have amassed an impressive amount which could take days to sift through. That’s why it’s best to set up a system that separates your records into categories. Five smaller boxes are far less intimidating than the one your refrigerator was shipped in.
Depending on your own strategies for paying fewer taxes, you may have many types of receipts for 2017 taxes or only a couple. At a minimum, it is wise to include these five categories when you are getting organized.
If you own your own business, you will be surprised at how many of your routine costs can be itemized. Office supplies, training and education, marketing materials, and certain vehicle expenses are all potential gold mines for reducing your taxable income.
Even if you are not self-employed, certain work-related expenses can be deducted. Most commonly mileage falls into this category as does any equipment you needed to purchase to perform your job responsibilities.
If you pay someone to watch your children while you are working or looking for work, you can most likely deduct those expenses if you save the receipts for 2017 taxes.
Many medical expenses can be claimed, and often they take a big bite out of your tax bill. This includes medical care you have covered for dependents.
If you’re unsure if an expense can be itemized save the receipt and find out at tax time. You’ll never know unless you try. A fifth box for miscellaneous expenses is the perfect way to keep these potential windfalls organized.
Prepping your receipts for 2017 taxes is one of the easiest ways around to save money. It’s a simple process. Save your receipts and file them. Do this, and you’ll be smiling come tax season. Don’t, and you’ll most likely be leaving money on the table.