LPT Request: How to prepare for the best tax refund next year

Submitted by PeachyQuiinn t3_11b5djv in LifeProTips

I heard somewhere that you should save every single receipt of every expense you ever have (i.e. restaurants, groceries, clothes, etc). Last year I saved only medical, cell phone, house improvement receipts, and auto. But my tax preparer didn’t really ask to see any of the receipts, just to tell them an estimate of how much it was.

So, what receipts should I keep or what kind of expenses/income should I write down for next year. I was thinking about starting a spreadsheet summarizing every single expense I have every month so I can just give that to them and they can report accordingly.

And how detailed should I write down each expense? Last year I had my basement completely renovated and only had receipts from hardware stores and labor but they asked how much were the doors, how much was the flooring, insulation, walls, counters, appliances, etc. all individually. I was like idk I just know all these receipts were from basement expenses!

TLDR; what receipts and/or documents should I have ready to get the best refund next year’s tax season?

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keepthetips t1_j9w07gx wrote

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madoneforever t1_j9w2ng2 wrote

Learning how taxes work is important. This is a very in-depth topic and can change annually depending on the current tax law. I would suggest first checking and seeing if a standard deduction makes the most sense for you. If you have property, assets or major medical expenses look up the rules for each type of asset you have and the current rules for medical deductions. Once you figure out your deductions, change your tax withdrawals so that your net taxes owed is close to zero. I.e. no refund. Instead put any extra money into savings or invest it.

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MuForceShoelace t1_j9w64jl wrote

The big thing is that a long time ago that sort of itemized deduction stuff mattered a ton, now, almost everyone just takes the standard deduction. Your tax preparer was just going "hey, is there anything special that makes it worth itemizing?" and the answer was no so they went standard deduction. Like, 90% of people are better off standard deduction now, you need a really specific business type situation to get anything from itemizing and will just work it all out, see the number is lower than the standard deduction and take that instead.

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QueasyAd1142 t1_j9w6z0a wrote

I have a shoebox in an easy to reach kitchen cabinet I throw receipts in; from everything. I don’t do it so much for tax reasons (Im a standard deduction sort) but if something I bought needs to be returned, I know right where to go to find the receipt because I pay cash at almost all point of sale purchases. Old-fashioned, I know but it works for me.

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ItsAllJustMalarkey t1_j9wdn5t wrote

Do you usually take the standard deduction? Or do you itemize?

As far as I know, groceries are not tax deductible. Nor clothes, unless its special work gear. But thags usually for independent contractors.

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CollinUrshit t1_j9xfqul wrote

Learn what a standard deduction is vs itemized deductions.

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FA-1800 t1_ja0n68q wrote

To start with, only some expenses are deductible. Medical expenses, but only if they exceed 8.5% or so of your adjusted gross income. Not clothing, unless it is clearly needed for work and not everyday clothes. Charity contributions, a few other things. The deal is, though, the standard deduction is so large these days that you need a huge amount in deductions before itemizing makes sense. If you're not paying mortgage interest and property taxes, it's hard for the average person to dig up enough in deductions to make it worth while. If are doing jointly, you need one 25000 in deductions before itemizing starts to make sense. It's how they simple tax filing a few years ago: they just gave everybody more in the standard deduction.

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