Tracking tax related expenses

It’s that time of year again. Turning that messy box of receipts into your tax return might seem like a magic trick, but there is a way to accomplish this feat. You can start now for next year’s taxes or take what you have for your 2015 taxes and go from there.

There is software available, such as QuickBooks, that will help you keep track of expenses as you go throughout the year and even connect to your virtual checkbook. Many banks offer similar software through their online banking sites.

If you want to do things the old school way, you will need some envelopes and a ledger book. Aim 4 Order offers an easy download for a handy Expense Sheet. Feel free to print out the form and use with our compliments. If you want to organize paper receipts to go along with the accounting software, you can use the envelope method to sort them.

Divide your receipts into categories such as interest paid, medical expenses, travel expenses and charitable donations. Mark an envelope for each of the categories you need. As you put the receipts in the envelopes, write down the amount in the ledger with a heading for each of the respective categories.

Travel expenses can add complications. Triplog app for mobile phones logs your business car trips and automatically figures out mileage. This software can create expense reports. However, just like writing down your mileage, you have to remember to use the app. My personal favorite is MileIQ which stays on your phone and automatically tracks all of your trips. All you have to do is swipe left or right to indicate whether it’s a business or personal mileage expense.

To start saving receipts for next year’s taxes, you can use an accordion file to separate the receipts into categories. When you purchase something, you can put the receipt directly into the appropriate slot in the accordion file and at the end of this year, everything will already be sorted for you.

Taxes can be a real headache for most of us. Staying on top of your receipts can help reduce your stress level at tax time.