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Saving receipts for taxes allows individuals to have documentation of their expenses and deductions for tax purposes, which can help reduce their taxable income and potentially lower their tax liability.
You should save receipts for any expenses that you plan to deduct on your tax return, such as business expenses, charitable donations, and medical expenses. You may also want to save receipts for major purchases, like a home or car, in case you need to prove the cost for tax purposes in the future.
The general rule is to keep tax receipts for at least three years after the tax return is filed. However, it is recommended to keep them for seven years in case of an audit or if you need to amend a previous tax return.
Yes, electronic receipts are accepted by the IRS as long as they contain the necessary information, such as the date, amount, and description of the expense. It is important to keep these electronic receipts organized and easily accessible in case of an audit.
If you do not save your receipts for taxes, you may miss out on potential deductions and end up paying more in taxes. Additionally, if you are audited and cannot provide proof of your expenses, the IRS may disallow those deductions and you may owe additional taxes and penalties.