why keep receipts for income tax?

Question

i always hear about people saving there receipts in hopes of getting their taxes on the purchases back. is it true? will only medical receipts work or any purchase?

Answer 1

What I think this is referring to is the deduction on Schedule A for taking either state taxes paid or sales taxes (helps persons in the states that don't have a state income tax, but do have a sales tax). You can take one or the other, and if you do take the sales tax deduction the irs lets you take an estimate based on some formula of your income and the sales tax in your state. However, if you have all the receipts for things that you bought during the year that you have your entire sales tax paid for the year, and can claim that amount on Schedule A. Just remember, it has to be either state income tax or sales tax, it can't be both.

Answer 2

You only need to save receipts for any expenses that you claimed on your income tax. The reason you keep the receipts is in case you get audited. I haven't heard of people keeping receipts hoping to get the tax back on their purchases. You can write off medical receipts if you file a Sch. A with your taxes. Even then you can only claim a certain amount. People that are self-employed have more write offs and therefore need to keep more receipts.

Answer 3

There are a number of items that are deductible if you itemize, and it's a good idea to save receipts for those items if you expect to itemize, so if you're audited you can prove them.

As for saving all receipts to be able to deduct sales tax, it might or might not be worthwhile. For the last couple years, a person who itemizes has had the choice of deducting sales tax or state and local tax. For states with a state income tax, that's usually more than the sales tax for most people, but for states with no income tax, sales tax might be deducted. If you are deducting sales tax, there was a table for each state, with a flat amount you could deduct based on your income and family size - if you could prove that you actually paid more sales tax than the table showed, then you could deduct the actual. And they didn't get their sales tax all back, just were able to deduct it from income before figuring their taxes so did get some benefit. But saving all receipts and adding them up would be a lot of work, hoping to come up with a higher figure than the flat amount. If someone bought a car, plane, or boat, they were allowed to add the sales tax on that item to the amount in the table.

Answer 4

If you write something off on your taxes you need to prove that you bought it. I could say that I bought a car for my home business and claim -- lets say -- a $5000 deduction on my taxes. I need to prove that I bought said car in that case. If I didn't buy the car and I only said I did that would be an example of tax fraud and the IRS would rip me apart. After you file your returns any time in the next 7 years the IRS can take out your return and audit them and if you can't prove it you are in trouble.

You needs to save recipts for anything that you have or plan to write off on your taxes.

Answer 5

You keep the receipts if you are going to itemize your deductions. Only certain expenses qualify, medical expenses being one.

You will have to check out the IRS web site to find out what can be used as a deduction.

Answer 6

In case you get audited, you'll need proof of your major expenditures. Some people keep all their receipts just in case.

Answer 7

Items that are deductable when you file a long form return need reciepts to prove amounts deducted if audited

Answer 8

It true
it is safe and money consuming one for us
so dont miss it bye
tc