We buy something, we keep the receipt. It’s a habit, fed by this niggling fear that ‘I might just need this someday.’ So the receipts multiply, infesting our pockets, bags, drawers. If we’re particularly organized we may have them all in a shoebox, ignored till tax time.
The problem is that too many receipts take up space, and make it really hard to find the ones that we really do need. The good news is that we can safely throw most of them out. Here’s a simple guide on what to keep, and what to chuck into the wastebasket.
Basically, these are things that you paid for in cash. Keep these just long enough to be able to record, in a notebook or computer software, your spending. (Read our tips on how to track your daily expenses.)
Credit card receipts
Keep these only long enough to double check the purchases against your monthly credit card statement. Since some expenses can take time to be reflected in your bill, you may want to hold on to it for about 2 months. If all goes well, then shred them. You don’t want anyone to rifle through your things and see your account name and number.
You only want to keep these receipts long enough to be able to return an item if it is damaged. However, stores will not refund or exchange an item without a tag. So if you’ve worn it, and torn off the tag, then you can throw away the receipt.
File these only if they are a business expense and plan to reimburse them or use them as a tax shield.
The receipts you really need to keep
File, and even scan, receipts that are related to business expenses. (Check out the IRS tax guide for small businesses.) Many of them are tax deductible, and you may need to present them in case of a tax audit. These include gas and transportation, meals (when you wine and dine clients), purchase of equipment, and any incidental expenses. Financial experts say that, for tax purposes, keep a copy of business related receipts for about 7 years.
If you are an employee, you will have to submit the receipt in order to be reimbursed. However, make your own copy (photocopy or scan) in case some idiot from Finance loses it. As a general rule, keep a copy of the receipt until you have been reimbursed.
You should also keep receipts from medicines, medical procedures and visits, since they can be used for tax deductions and insurance.
Also keep receipts for appliances and electronics, since this can help you claim any warranty in case you encounter a problem. For convenience, staple the receipt to the warranty card. Place this in a ‘warranty’ folder so you can find them immediately.
Photo from wasteman.com.au