Reframing Receipts

20130910-184609.jpgThis is NOT a post about a quirky design scheme whereby I laser focus on reducing our expenses by framing them and mounting them on the wall. Instead, it’s one small move that changed Mr PoP’s perspective on receipts for the better.

You See, Mr PoP Hates Dead Trees

If Mr PoP had his way, International Paper Company would be out of business. I don’t know if I’ve ever known someone who has truly embraced the digital world the way Mr PoP does. This man HATES paper. When the original Kindle came out (and was still ridiculously expensive), he bought one and henceforth refers to print books as “dead tree editions”. He prefers vCards to business cards, and if you ever remind him of an obligation or ask him to do something his immediate response is “Can you send me an email with that?” Followed sometimes by, “Don’t forget to attach an outlook invite.”

And receipts? What need does he have for receipts when all of our purchases are made on rewards credit cards where the transaction is immediately tracked via mint, and any returns are super easy since they can always be looked up by our cards even when we don’t have receipts.

For our normal everyday life, this is okay. Some might criticize, but we don’t keep receipts for every little purchase in life. I usually double check a receipt for errors as I’m leaving the store, but then have no qualms about disposing of it. After all, I’ve run the numbers many times (and our tax man has even double checked them!) and we’re so far from being able to itemize deductions on our taxes that it’s not worth the hassle of keeping receipts.

 

EXCEPT For Our Rental Expenses

Unlike normal itemized deductions, expenses for our rental duplex are fully deductible (against the rental income) above and beyond the standard IRS deduction. But (in case of audit), we need to have receipts to back them up and I’m the bookkeeper in the family. (There are a few caveats to the deductibility, but in general this is true for all expenses associated with repairs, maintenance, and advertising. Capital expenditures like a new AC unit need to be depreciated over time, but those big bills usually come directly to me so I don’t need to chase Mr PoP for them anyhow.)

So for the past almost 3 years, every time there’s been a rental expense that Mr PoP generates (and to be honest since he’s the one that does MOST of the repair work at the duplex, he’s the one buying MOST of the supplies for said work), it started a process that usually goes something like this:

  • Mr PoP mentions repair needed at duplex
  • I say, “Okay, just SAVE THE RECEIPT!”
  • Mr PoP rolls his eyes and then completes repair at duplex
  • I pester him for weeks about location of receipt and most of the time (but not all the time) it is recovered from the recesses of the center console in his car.

Once I even went looking for a receipt in his center console and – I’m not kidding! – was bit by a spider. We needed a better system and more buy in.

A Reframing

So a couple of weekends ago, when Mr PoP was mentioning something that needed to be fixed for our most recent batch of renters, I gave my typical, “Please, for the love of all that is holy! Save your receipts!” plea. And Mr PoP did his typical eye roll in response.

But then a minute later this happened:

Mrs PoP: “How about if every time you see a receipt for something at the duplex, you think of it as a voucher for 25% of what you just spent? Redeemable at tax time, but ONLY if we have the receipt.”

Mr PoP: “Why didn’t you tell that to me three years ago?”

Mrs PoP: “I didn’t know I had to!”

See, since our marginal tax bracket is 25% (though we’re getting close to 28%!), that means for every dollar of deduction we take against our rental income we avoid paying $0.25 in taxes on our rental income. Hence the 25% voucher.

Now Mr PoP is totally on board with keeping duplex receipts and even decided he wants an official “receipt container” that he’ll keep in his car. He’s pretty sure if that exists he’ll be able to keep the receipt as long as it takes him to get from the store to his car to put the receipt in its special location. Then we can empty it out and I can organize them once every few months.

Only time will tell how well this system will work, but reframing receipts in Mr PoP’s head as vouchers for cold, hard cash has definitely affected his buy-in when it comes to keeping track of them and saving them for tax time. And I can’t see that as anything but a good thing, especially if it reduces future eye rolling. =)

 

How do you view receipts? Has there been anything you’ve mentally reframed lately to help keep you on track?

62 comments to Reframing Receipts

  • That’s a great point, taxes impact us only once a year and it’s hard to keep them in mind all year long! It took us a few years of lost Goodwill donation receipts before we realized how much of an impact those can have. We file them away immediately now!
    FI Pilgrim recently posted..Planning To Have Kids? Don’t Buy That Minivan Just YetMy Profile

  • Viewing tax deductible receipts as vouchers for 25% off of your purchase is a great idea. I’ll definitely be using this analogy with my partner to make sure she hangs onto her receipts for tax time.
    Financial Independence recently posted..Understanding Diamond PricesMy Profile

  • I figured Mr. Pop would know that already, but those nuances aren’t always common knowledge. Sometimes when I’m with friends, ill launch into long financial explanations as to why a particular practice is ridiculous, but my friends stop me and ask simple financial questions I thought everyone knew. Reframing can help quite a bit in situations like this.
    Cash Rebel recently posted..Feeling blue? Why not move to Mexico?My Profile

    • He knew about the deductibility of our expenses in a general sense, but I don’t think he had really connected the receipts for them and money in our pocket in that way.

  • Funny, I just dug a receipt from Home Depot out of the trash the other day. We bought some deck paint for our rental and Greg ALWAYS forgets to save the receipts. Or, if he does “save” them, he saves them in his car or something. He knows that they’re worth money, too, he’s just bad at saving them!
    Holly@ClubThrifty recently posted..My Frugal Weekend Getaway with Credit Card RewardsMy Profile

  • We use Evernote for tax expenses – an electronic filing system is perfectly acceptable to the IRS as long as it’s organized, has timestamps, etc. And from personal experience having gone through an audit of our rental expenses this January – the IRS accepts it all electronically (we did print them out to take to the meeting with us, but we brought the laptop with Evernote just in case). http://www.irs.gov/publications/p552/ar02.html
    Mom @ Three is Plenty recently posted..Measuring Investment Risk – Calculating ReturnsMy Profile

  • i hate receipts too.. but i can understand the need for them when business expenses are involved.. thankfully, most stores will let you do a credit card lookup to find and verify your purchase when making a return..

    those stores that don’t allow this, have likely become stores that we don’t shop at anymore :)
    jefferson @See Debt Run recently posted..See Debt Run – a September UpdateMy Profile

  • My first year working for myself, I didn’t even think to keep receipts for write offs and, I paid the price. Now I use a spreadsheet that keeps track and my receipts are all stored in my filing cabinet in the file marked for the type of expense it was for. Thanks for the great read!
    Josh (CNAFinance.com) recently posted..How To Protect Yourself From Identity Theft OnlineMy Profile

  • Nice solution. It always helps to make things as simple as possible, especially when it’s something unenjoyable. Having an easy system like that should really help. By the way, I hate receipts too. And I hate receiving bank statements in the mail. I keep trying to turn that off but my banks seem to like to send them anyways. Such a waste.
    Matt Becker recently posted..The Peer-to-Peer Lending Numbers They Don’t Want You to SeeMy Profile

  • Debbie M

    Receipts – I think you can save some of those on your own house to help reduce the capital gains you pay taxes on when you sell (if you downsize or switch to renting). Your reframing also works on charitable contributions if you itemize (and probably plenty of other things if you itemize). And if you have an HSA (health savings account) and you’re leaving money in there and using other money for health expenditures, you could save those receipts for proof that you’re allowed to withdraw that money.

    When I buy something with a warranty, I keep the receipt with the warranty and, if there is one, the manual. I have all these in a box.

    All other receipts get kept for about one year. I have one envelope for each month and I keep them in order by month in a mail holder except for the current month, which gets pulled out and stored in front. When I go to store the first receipt for a new month, I put last month’s envelope back in place, pull out the new envelope, empty the receipts, put in the new receipt, and put the envelope in its new place.

    I briefly look through the old receipts in case I realize one should be saved or in case I want to add something to my price book or something. Then I put them in with the paper recycling.

    These receipts rarely come in handy, but when I realize I want to return something, it’s nice to know that I always have the receipt. Rarely do I wish I had a receipt over a month old, but it was nice to have almost a whole year’s worth the time I decided to double-check whether I’d get a better deduction for sales taxes by adding up my sales taxes I’d paid or by using the standard calculation. I learned that most of what I buy does not have a sales tax: food, ballroom dance classes, property taxes!

    Reframing – Have I reframed anything lately? Hard question! You’re making me think!

    Okay, I’m on unemployment right now. Instead of thinking of that as free money, I think of that as being paid to job hunt. So filling out all the paperwork, doing the things they want me to, and maybe applying for more jobs than I otherwise would are all part of a paying job, and I’ve had worse jobs before! I try to be just as desperate about job hunting as I would be if there were no income coming in.

    Less recently I learned to tell myself that my house does not need to be a museum of everything cool I’ve ever seen. It should have some cool things in it. But it’s really okay not to own every cool thing. I might still collect pictures of some of these cool things, but I don’t have to buy them all. It doesn’t make my life better to spend a lot of money on cool things or to fill up my house with cool things or to buy a bigger house to hold cool things. A friend of mine tells a similar thing to herself when she says that stores are places where you store stuff. You don’t have to store everything you might ever possibly need at your house because that’s what stores are for. (Of course things get discontinued a lot, so store storage isn’t perfect. And libraries have turnover, too, so library storage isn’t perfect either.)

    • I think married couples can exclude the first $500,000 in capital gains from their primary residence sale, so I’m not really worried about keeping track of receipts for our primary home. We’d have to see some INSANE market gains before there was any chance of those kinds of capital gains. =)

      I like the reframing of your unemployment payments as pay to job hunt. I found that making job hunting feel like a job (I made myself get up and go to the library in the mornings to work on my resume and cover letters during my last job hunt) really helped keep structure in it and keep the process moving.

  • That is a wonderful idea. Jim is horrible with receipts and really keeping track of anything. I don’t know what the man would do without me. His new job reimburses for materials he has to purchase for work and mileage IF he keeps up with the receipts and submits a mileage log. I have been like white on rice. He thinks about it more like $5 here $10 there, but if you look at the whole year, it’s alot of money. He did just get his first reimbursement check yesterday, because I hounded him to turn stuff in. He was pretty excited, so maybe that was the motivator he needed. I hope so.
    Kim@Eyesonthedollar recently posted..Should We Buy Another Rental Property?My Profile

    • Haha, maybe let him spend a certain percent of the reimbursement checks on something fun for him and see how much more motivated he is to keep track of them then!

  • Meghan

    Both Home Depot and Lowe’s receipts fade within 3 or 4 years, so I highly recommend scanning and saving them to your hard drive.

  • I wish retailers would step up their game and start going digital with receipts.
    No Waste recently posted..I Hate FashionMy Profile

  • CincyCat

    I was going to suggest a special container! That worked really well for my husband and I. We have a decorative pot with a lid that sits in our living room on a shelf near the door. The untrained eye has no idea that it is stuffed with receipts. :)

  • That’s a great way of framing it, especially since you itemize. We’re still using the standard deduction so we might need another trick…but that’s a pretty clever way of changing the way you can view the receipts.
    Done by Forty recently posted..Lessons from Chip KellyMy Profile

    • We actually don’t itemize, it’s just that expenses for rental income are deductible against rental income outside of the standard or itemized deductions part. Kindof confusing, but it works out better for us this way so I can’t complain.

  • I am rubbish with receipts and book keeping to be honest. I keep all my receipts but they seem to land in various places so I can never find them when I need them, only after I’ve submitted my tax return. I really need to pencil in a few hours a month to get on top of my receipts.
    debtfreeoneday recently posted..10 ways to reduce the cost of weddings without compromiseMy Profile

  • Currently, I’m trying to save some receipts for the sole purpose of being able to compare lowest prices but I’ve yet to have time to really put it all on a spreadsheet.

    But since I have no deductions to make as I’m a renter, I have no need for the otherwise. That’s why I love using credit cards, it really helps me track expenses better.
    Tara @ Streets Ahead Living recently posted..TodayMy Profile

  • Clever motivational idea!! I’m liking how some stores have an email option for receipts – hopefully that will be the status quo in the next few years!
    anna recently posted..How I Got My Haggle On (kind of) and Some Shopping Teachable MomentsMy Profile

    • I mostly agree… I don’t want to have to type my email address in (or say it aloud to the cashier) every time, though. Hopefully they can make that part seamless!

  • I think I’m quite the opposite of Mr. PoP – I save EVERY SINGLE RECEIPT – even if it’s just for a small coffee or something. I really need to start rethinking these habits, haha.
    Lisa E. recently posted..Weekend Recap: KoinoniaMy Profile

  • I hate receipts too (although I shamefully LOVE paper!). Their just annoying pieces of paper I need to keep for all my write-offs as well. I do have a sort of system, but I’ve yet to get it all down pat. Tax time is hell for me! :)
    Budget and the Beach recently posted..Make money with what you already haveMy Profile

    • haha, no shame in loving paper. For a while I had to write out all my blog posts in long form by hand to get the creative juices flowing. Several steno pads donated their pages for the cause. =)

  • The only reason I’ve been hanging onto my receipts is to keep track of the sales tax that is taken out. I’m just curious to see how much I pay over the course of the year to get a better picture of my tax contributions. Otherwise I would be the same way, no need to hang on to the paper.
    Micro recently posted..Do you keep easy quick meals on hand?My Profile

    • My friend who is an accountant keeps exact track of that, too. Feels like a LOT of effort for minimal benefit.

      I’ve estimated sales tax in the past by taking all our purchases and subtracting off groceries (no tax), gas (separate tax, not sales tax), utilities, and mortgage and multiplying that yearly figure by our sales tax rate. It’s always MUCH lower than the IRS allowable sales tax deduction for residents who don’t pay income taxes, which says a lot about how much the IRS assumes the average person spends out of their income.

  • Why did he think you wanted the receipts in the first place? Did he not understand taxes?
    nicoleandmaggie recently posted..We’re Back!My Profile

  • I don’t have a business but I can understand how very important the receipts are to you for tax purposes. We do keep every single receipt so we can track our expenses in our budget. It works for us.
    canadianbudgetbinder recently posted..The costs of being too niceMy Profile

  • Haha: “why didn’t you tell me that 3 years ago?”. Sounds a lot like me….
    moneystepper.com recently posted..Attitude to money – the three second testMy Profile

  • Mrs Pop :I agree with your logic in saving receipts and looking at it from a tax perspective. My wife lost our $2000 “donation” to get married at a church we didn’t go to, that was several hundred bucks in write offs.

    I use an app called genius scan which I take pictures of all my receipts, then email it to myself and place it on a spreadsheet.
    charles@gettingarichlife recently posted..My $35,000 Solar Bet With The BankMy Profile

  • I love it! Great job reframing! Now, where do you keep all these receipts?
    Pretired Nick recently posted..Pretirement story: Planning a move to SpainMy Profile

  • Glad to hear Mr POP hates destroying trees. We each should take a look at how much paper we are using and find a digital alternative. There is an alternative to almost every paper medium. Why not save our environment by simply making the digital choice?
    Free Money Minute recently posted..Graduate Debt FreeMy Profile

  • Todd

    Enjoy reading your blog, but since I work for International Paper I thought I would chime in on that piece of this post. I agree that if you don’t like the hassle of paper receipts then by all means go electronic. But I ask any of you who believe that paper kills tree, to go the the following website – http://www.GoPaperGrowTrees.com

    This site has the facts about the renewable resource that is paper versus what is actually causing the death of trees that never come back – hint think Urban Growth.

    • Didn’t mean any harm with my flippant comment about your employer, Todd. Hope I didn’t offend!

      Thanks for the link – I’ll definitely take a look into it. I’ve also heard that cattle ranching is one of the biggest drivers of destruction of the amazon. Puts hamburgers in perspective…

      • Todd

        No offense at all. Just thought I would take the opportunity to provide a different perspective on paper and it’s true sustainability versus the popular myths out there.

        I know I won’t change everyone’s mind, but I feel very good about the story of International Paper and how we’ve survived for over 100 years by properly managing our natural resources.

  • Brilliant, just brilliant! Nothing more I can say about that :-)
    Retired By 40! recently posted..Budget – Before and After Baby (In Theory)My Profile

  • haha that’s cute. I hate receipts too because they take space in my pockets, bags, and then getting rid of them takes time. But for a 25% rebate you can be sure I’d keep them.
    Pauline @ Make Money Your Way recently posted..Going self hosted right away: How to link Godaddy, Hostgator and WordPressMy Profile

  • I save every receipt these days. These are just usual receipts from the grocery store, etc. I keep them for about one week and once I’ve completed my “expense form” for that week, I get rid of them. I’m not self-employed, so I don’t get any tax back, this is just for my own records to track my spending. So far so good 😛
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