Which receipts should I keep for taxes?

Navigating the complicated maze of state and federal tax deductions and credits can feel overwhelming, but it starts with one simple task: keeping the right receipts.

Whether you’re aiming to boost your tax refund or to simply organize your financial records, knowing which receipts to save can make all the difference come tax season.

That’s why it’s crucial to know which receipts to retain and why.

We’ll explain how tax-savvy recordkeeping can help you make the most of your deductions and common categories to review for receipts.

• Medical expenses
• Childcare expenses
• Self-employment expenses
• Other expenses

Medical expenses

While you may have heard that medical expenses are deductible on your personal income tax return, you may be wondering exactly which expenses qualify. To deduct your medical expenses, you’ll have to itemize your deductions.

You can deduct medical expenses only if they amount to more than 7.5% of your adjusted gross income, or AGI. This means if your total medical costs don’t reach this threshold, you won’t be able to claim them as deductions.

Qualified deductions include any of the following expenses paid for yourself, your spouse, your dependents and any children that you could have claimed but didn’t because of a divorce or separation agreement or because their income was too high:

• Premiums for medical, dental, long-term care, vision, Medicare Part B, and Medicare Part D insurance that you are not reimbursed for and that are not paid using pretax dollars
• Co-pays for medical, dental or vision care
• The cost of eyeglasses, contact lenses, prescription medicine, breast pumps or other lactation aids, crutches, hearing aids, braces, wheelchairs and other medical aids, all costs associated with guide dogs, and medical exam or test fees
• Acupuncture, chiropractic services, podiatrists, sessions with a psychiatrist or psychologist and occupational and physical therapy
• Nursing care, hospital stays, programs to help you stop smoking, and weight-loss programs for the treatment of obesity or another condition diagnosed by a doctor
• The cost of parking fees, tolls, transportation and mileage for the trip to and from appointments with any of these medical professionals, transportation via ambulance to a medical facility, and the cost of overnight hotel stays for treatment that is received out of town

Childcare expenses

You may be able to receive a credit for child or dependent care expenses paid to a babysitter, daycare, day camp, after-school program or other care provider.

If the care is provided in your home, additional expenses may also qualify, such as the cost of a maid, cook or housekeeper hired to provide services or care for your child or dependent.

These expenses only qualify if you paid them to enable you (and your spouse if married) to work or look for work. In order to qualify, you and your spouse must both have earned income, unless your spouse is disabled or a full-time student.

You can collect this credit for one of the following types of dependents:

• A child under the age of 13 who you claim as a dependent
• A disabled spouse or dependent who is physically or mentally unable to care for themselves

Self-employment expenses

When you are self-employed, many of the expenses you pay for such as materials, supplies, marketing, office expenses, insurance and travel can be deducted when you file your income taxes. Certain utilities and expenses for operating a business from your home also may qualify.

For self-employed individuals, it is often helpful to save receipts from every purchase you make that is related to your business and to keep track of all of your utility bills, rent, and mortgage information for consideration at tax time.

If you want to avoid a mound of paperwork, scan receipts and keep digital copies throughout the year.

Other expenses

There are a few other receipts that you may want to save, depending on your personal tax situation. For some, it is beneficial to deduct your state and local sales tax on your itemized deductions, rather than the amount of state and local income taxes you paid during the year.

Typically, the deduction of sales tax only benefits a person with one or more large purchases for the tax year — such as a car, boat, RV, or home addition — that led to a greater amount of sales tax paid than the amount of income tax withheld or when you live in a state that does not have a state income tax. If you meet this description, you’ll want to save all sales receipts.

Next steps

Organizing your receipts can make a big difference at tax time. Whether you use a simple folder or a digital app, getting your documents in order can save you time and effort when you file your taxes.

While you don’t have to include receipts with your tax return, you might need them to verify your expenses if the IRS decides to audit your return.

By putting a simple organizing strategy into practice, you’re not just preparing for the next tax season — you’re helping build a foundation for improved financial management.

This article was adapted from TurboTax.