Monday, June 22

Yet another reason to keep your receipts

Photo by The Consumerist


I'm betting we've all heard about how important it is to keep your receipts. I have a gift card to the Dress Barn right now that serves as proof that keeping a receipt can make all the difference between unwanted store credit and a reversed charge on a credit card. (Sigh.)


I know I should keep my receipts. They can come in handy for plenty of reasons. But I'm scatterbrained, even on the best days. Other days, my brain apparently just decides to abdicate completely. So organization is a hard thing to keep up.


But I've discovered a new reason to keep our sales receipts: taxes.


See, if you itemize your tax deductions, you can include sales tax. To figure this amount, you can either use the IRS calculator, which will give you an estimate, or you can keep all your receipts. If you choose the latter, of course, you have to find a place to keep them all and go through to add them up at the end of the year.


All that aggravation is probably why I've never met anyone who actually saves all receipts. It's an awful lot of hassle. And yet, I'm currently scouting a box to start keeping our receipts in. We'll probably name it something especially crafty -- like "The Sales Tax Receipts Box." (I'm just creative like that.)


So why am I embarking on what seems like a colossal waste of time? It's pretty simple. I finally looked up our estimate. According to the IRS, when you earn $30,000-40,000 in Seattle you will pay approximately $672 in sales tax.


Okay, that's not a bad chunk of change. But there are a couple of points to consider. First, it's that Tim and I are constantly running into unexpected expenses. Very annoying and (cumulatively) very costly. Second, Seattle sales tax is 9.5 percent. Working backwards, that's $7073.68 worth of purchases.


Less than $7,100 of taxable items? Somehow I doubt it. Big time. Even shopping on sales, Tim's Body Shop stuff -- the only products that seem to really soothe his eczema -- runs close to $1,000, I'd say. And that's hardly the only taxable stuff we buy. So we're saving sales tax receipts.


Of course, that doesn't help us with the past 6 months' worth of receipts that we tossed. Being the crafty gal that I am, though, I was able to figure out sales tax after the fact. I just went back to credit card and checking account statements. Using total purchase amounts, I figured out the amount of sales tax. (See, kids? You will use algebra when you're out of school... if you're a huge geek like me.)



As a quick note, I avoided using grocery purchases, since most items aren't taxable. I also made sure to be overly generous in figuring out how much we would have tipped for deliveries and meals out.



Just based on the transactions I could find, I'm already up to $312. And that's missing a lot of receipts.



I want to point out one more benefit of this system: You have to look at your bills back to back. I was moderately horrified by the sheer number of deliveries we have charged so far this year. It can be a real eye opener.



Overall, we shoot for no more than one delivery or meal out per week. Still, as our health and stress levels vary, so does our success with this goal. I knew this abstractly, but it was a bit of a shock to type in six months' worth.



In fact, on average, we actually were about right. Previous to farmers market season, we were shooting for $35 a week. The average of these transactions (including weeks where we felt awful and got premade food two or even three times a week) was $41 per week. Still, that's a pretty painful total -- $1004.93 to be exact. Ouch! That should help reinforce my resolve to cut down in this area of the budget.



I guess the moral of the story is, even if you have no interest in saving sales receipts, you should periodically check your various spending totals. Quicken and other money management software will generally do this for you, so you can see the horrific numbers without any work on your part!







So is anyone else saving sales receipts? If not, are you considering doing it next year? What about checking your spending totals?

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6 Comments:

Blogger Cents in the City said...

My tax returns don't have much going on, so I don't itemize, but for some reason I do save all my receipts. It's a weird habit, but it has proved to be helpful when returning items. There is a website called https://www.shoeboxed.com that can help you organize receipts. They have a service where you can mail them in (which is not free), but I also believe that you can manually upload them for free.

June 23, 2009 at 7:55 AM

 
Blogger Abby said...

Cents in the City,

Hmm I will definitely have to check that out! I don't think I'd want to pay them, but scanning and such isn't the worst idea in the world...

June 23, 2009 at 10:39 AM

 
Blogger Revanche said...

Yes, I keep all my receipts. I just tuck them into an envelope in chronological order because apparently my brain is most capable of figuring out approximately when I bought something rather than categorically by purchase type. [No, that doesn't really make sense.]

I've considered going to scanning, though I'm not sure if that's adequate for tax purposes. I pretty much just keep receipts for returning things. And I'd need to buy a scanner, but I already need one.

June 23, 2009 at 2:14 PM

 
Blogger Rachel said...

We do save all our receipts for this purpose, although we don't know until the end of the year whether we'll use them or not. Since California has personal income tax at the state level, at the federal level we have the option of deducting our state income tax OR our state and local sales tax paid. So it depends on which number is bigger.

We do scan all the receipts and keep them in an electronic format. Remember, the IRS can ask you to substantiate just about anything on your return if you get picked for an audit. And since so many receipts are printed on that darn thermal paper, we scan because a year later a lot of them are unreadable.

June 23, 2009 at 6:17 PM

 
Blogger Bouncing Back said...

I have an envelope I keep in my purse for all my reciepts. I get a reciept, I stick it in the envelope. Once a week I sit down and sort out my reciepts-keep for business, keep because you need to (a purchase) or purge because it's useless. You just have to get into the habit of keeping them. Having the envelope is a big help, it reduces the paper clutter in my wallet and purse. When I had a very active part time business, my accountant was emphatic I keep every reciept related to my business, the easiest way to get into the habit was to just shove all those receipts into a shoe box! If you have access to a scanner, you can scan your reciepts too. The IRS will accept scanned reciepts for tax purposes.

June 24, 2009 at 7:56 AM

 
Blogger Cindy B. of Montana said...

I use to live in Bonney Lake and paid those same ridiculously high sales taxes. I did keep my recipts and itemized. I found that I did get more back by doing it rather than taking the deduction the IRS gives you. It wasn't alot, but enough to do it. I forced myself to sit down on a regular basis and add it up, once a week or at the least once a month. I'd grab a stack of receipts, add up the sales tax, staple the stack together and write the total tax on the top of the stack. Then I'd put that in a file. At the end of the year I just had to add up the totals on each bunch of receipts. The biggest problems is storing them in case of an audit, those things get bulky!

June 24, 2009 at 9:18 AM

 

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