What types of receipts do I need to keep for itemized tax deductions?
"I would say to only bother keeping the ones you know you'll use for itemized deductions. This includes any unreimbursed business expenses and vehicle licensing fees. There are a lot of other itemized tax deductions possible, but those are two common ones. Also, keep track of your business mileage (mileage before and after the trip, and commuting doesn't count as ""business mileage""). You may also want to keep receipts of all out-of-state purchases if your state is one of those that tries to collect state tax on out-of-state purchases. Ensure your supported charities are 501(c)(3), and they'll give you a receipt at the end of the year. Don't bother keeping fast food or gas receipts (unless they're business expenses)." I err on the side of saving all of mine for a while.  Just toss them in a box at least.  A years' worth is about the size of a shoebox. I started doing this because one year, about a week after I tossed my receipts for the year, I realized that I had a fair bit of allotment left on my flexible savings account to use up.  I could have used those to substantiate over-the-counter medicines I purchased. Even if you don't use them for tax purposes, you can use them for budget-tracking purposes. Businesses are only required to keep receipts over $751. However for individuals, I would throw them all in a shoebox and not worry about organizing them.  There's a small chance you'll need to go through them during an audit, and you can worry about reconciling all of them and putting them in order at that point.  Just write 2010 on the box and keep it somewhere easy, and at the end of the year throw it in your basement (or get a scanner, and scan and trash the original).
If you can afford to max out an HSA and cover out of pocket expenses without withdrawing from it, it makes sense to do so.  It might sound initially risky to tie too much money to healthcare expenses, perhaps you'll enjoy exceptional health and not need those funds. However, the annual contribution limit ($3,350/year for an individual) is low enough that it's unlikely you'd overfund your HSA, but even if you didn't need it all for healthcare, after 65 you can withdraw HSA funds without the 20% withdrawal penalty that you're hit with if under 65, so best case it's tax-free, worst-case it's like an IRA.  From a tax perspective, your contributions are a tax-deduction like a traditional IRA, there's no tax on the gains, and you withdraw it tax-free as well, so long as you have healthcare expenses. The tricky bit is you can get reimbursed for your expenses at any time. If you pay out of pocket now, in 20 years you can get a reimbursement from your HSA: From HSA Bank's FAQ Can I use my tax-free HSA savings to pay for — or reimburse myself for   — IRS-qualified medical expenses from a previous year?    Yes, as long as   the IRS-qualified medical expenses were incurred after your HSA was   established, you can pay them or reimburse yourself with HSA funds at   any time. Just be sure to keep sufficient records to show that these   expenses were not previously paid for by another source or taken as an   itemized deduction in any prior tax year. "What kind of ""deductions"" are you talking about? Many deductions, like the standard/itemized deductions, come after the AGI, and do not affect the AGI, so I don't see how this would make any difference. Maybe you are talking about deductions that come before the AGI? If you want to increase your AGI legitimately, here's a way: Every year, itemize deductions on your federal return, and over-withhold your state income tax (assuming your state has income tax) by a lot, and/or make voluntary extra payments to your state income tax. As a result, you will get a huge refund on your state taxes the following year. Then you will need to include this refund as income on line 10 of the federal return that year, which will be included in the AGI. (Of course, you will also be able to deduct a lot of state income tax paid every year in the federal itemized deductions, but those come after the AGI.)" There is no reason for you to open a firm. However, it will help you, if you operate separate bank account for business and personal purposes. You can run your business as proprietorship business. Your inward remittance is your income. You can deduct payment made to your colleagues as salary. You should pay them by way of cheques or bank transfer only. You are also entitled to deduct other business expenses provided you keep proper receipt of the same such as broadband connection charges, depreciation on equipment and more importantly, rent on your house. If your total receipt from such income exceeds INR 60,00,000 you will need to withhold tax on payment made to your colleagues as also subject to audit of your accounts. If you want to grow your business, suggest you should take an Import / Export Code in your own name.  You can put any further question in this regard. "Document how you came to have the stuff in the first place. First to defend against potential government inquiry; and second to establish that you held the asset more than one year, so you qualify for long-term capital gains rate.  I wouldn't sell it privately all at once, if you can avoid it.   If you can prove you held it more than a year,  you should pay the long-term capital gains tax rate, which is fairly low.  You'll keep most of it.  A huge windfall often goes very badly. People don't change their financial habits, burn through their winnings shockingly fast, overspend it, and wind up deep in debt.  At the end of the crazy train, their lives end up worse.   That wasn't your question, but you'll do better if you're on guard for that, with good planning and a desire to invest it in things which give you deferred income in the future. That's the cooler thing, when your investments mean you don't have to go to work! I don't mean donate ALL of it to charity. But feel free.  If you hold a security more than one year, and donate it to charity, you get a tax deduction for the appreciated value (even though the security didn't actually cost you that). (link) Do not convert the BTC to cash then donate the cash. Donate it as BTC.  Your tax deduction works against your highest tax bracket.  If you are paying in a 28% tax bracket (your next $100 of income has $28 tax), then for every $100 of charitable donation, you get $28 back on Federal. It does the same to state tax, and you also avoid the 10-15% capital gains tax because you didn't sell the securities.  Do your 1040 both ways and note the difference.***** Your charitable deduction of appreciated securities is capped at 30% of AGI.  Any excess will carryover and becomes a tax deduction for the next year, and it can carryover for several years. **  Use a donor-advised fund. If you have are donating more than $5000, you don't need to search for a charity that will take Bitcoin, and you also don't need to pick a charity now.  Instead, open a special type of giving account called a Donor-Advised Fund.  The DAF, itself, is a charity. It specializes in accepting complex donations and liquidating them into cash.  The cash credits to your giving account.  You take the tax deduction in the year you give to the DAF.  Then, when you want to give to a charity, you tell the DAF to donate on your behalf***.   You can tell them to give on your behalf anonymously, or merely conceal your address so you don't get the endless charity junk mail.   The DAF lets you hold the money in index funds, so your ""charity nest egg"" can grow with the market.  Mine has more than doubled thanks to the market.  This money is no longer yours at this point; you can't give it back to yourself, only to licensed charities. The Fidelity Donor Advised Fund makes a big thing of taking Bitcoin, and I really like them. **** I love my DAF, and it has been a charitable-giving workhorse.  It turns you into a philanthropist, and that changes you life in ways I cannot describe. Certainly makes me more level-headed about money.   Lottery winner syndrome is just not a risk for me (partly because I'm now on the board of charities, and oversee an endowment.)  Donating generally will reduce suspicion (criminals don't do that), but donating to a DAF even moreso.  Since the DAF would have to return ill-gotten gains, they're involved.  Their lawyers will back you up.  The prosecutor is up against a billion dollar corporation instead of just you.  With Fidelity particularly, Bitcoin is a crusade for them, and their lawyers know how to defend Bitcoin.  A Fidelity DAF is a good play for that reason alone IMO.  ** The gory details: Presumably you are donating to regular charities or a Donor Advised Fund, and these are ""50% limit organizations"". Since it's capital gains, you have a 30% limit. If your donation is more than 30% of AGI, or if you have carryover from last year, you use Worksheet 2 in Publication 526. You plug your donations into line 4, then the worksheet grinds through all the math and shows what part you deduct this year and what part you carryover to the next year.  *** I specifically asked managers at two DAFs whether they were OK with someone donating a complex asset to the DAF, and immediately giving the entire cash amount to a charity.  The DAF doesn't get any fees if you do that.  They said not only are they OK with it, most of their donors do exactly that and most DAF accounts are empty.  They make it on the 0.6% a year custodial fee on the other accounts, and charitable giving to them.    Mind you, you can only donate to 501C3 type charities, what IRS calls ""50% limit organizations"".  This actually protects you from donating to organizations who lie about their status.  **** I'm not with Fidelity, but I am a satisfied DAF customer.  The DAF funds its overhead by deducting 0.6% per year from your giving account. If you invest the funds in a mutual fund within the DAF, that investment pays the 0.08% to 1.5% expense ratio of the fund.   I can live with that.  ***** I just Excel'd the value of donating $100 of appreciated security instead of taking it as capital gains income.  28% Fed tax, 15% Fed cap gains, 8% state tax on both.  Take the $100 as income, pay $23 in cap gains tax.  Donate $100 in securities, the $23 tax goes away since you didn't sell it. Really.  The $100 charitable deduction offsets $100 in income, also saving you $36 in regular income tax.  Net tax savings $59.  However you lost the $100!  So you are net $41 poorer.  It costs you $41 to donate $100 to charity.  This gets better in higher brackets." "The presenter suggested we keep records of our claims for 10+ years in paper form. This seemed to be overkill. It would be overkill if you're taking distributions regularly and you have enough valid (and otherwise unreimbursed) medical receipts each year to correspond to your distributions. However, if you are pumping money into the HSA without regular distributions, then you may need to keep receipts for a long time, possibly since the beginning of your HSA. For example: If the IRS was to audit my HSA deductions would the Aetna online claims be adequate? It's better than nothing, but it is not ideal. You need to provide proof of what you actually paid, not just what was billed. (How would the IRS know if you actually paid the bill?) So, the bill and receipt together would be preferred. Also, there are many eligible expenses for HSA that would not be covered by your health insurance and would not appear in your Aetna statements (dental work for example). Personally I have an excel spreadsheet with every eligible expense listed, every contribution and distribution I make, and a box of receipts since I opened the HSA account. Should I also archive screenshots of these claims digitally somewhere? If you have the time and diligence to do it, then it wouldn't hurt. I personally am only one house fire away from having to make a lot of phone calls if I wanted to re-build my receipts folder from scratch. I actually have ""scan my HSA receipts"" on my todo list (where's it been for years as a pretty low priority). Lastly it makes sense to spend the money in my HSA on anything eligible because you can never roll it over into a retirement account, its shaky if another person (spouse) could get reimbursed for eligible medical expenses if you die, and if you lose your receipts you may not be able to spend all of the HSA money tax free. Is this an accurate assessment or is there a reason why I should not touch the HSA money at all and wait to reimburse my eligible expenses. First off, if you are married the HSA can be transferred to your spouse. But in general, it really depends on what you would do with the money if you distributed it right away. If you need the money to pay debts, bills, etc, then it might make sense to take it, but if it would be extra money that you would invest somewhere, then you should leave it in the HSA because it grows tax free while it's in there and (probably) wouldn't if you take it out. The caveat though is that you need to find an HSA administrator that offers your preferred investment choices. As for your worry that you might lose your receipts, well, that's a valid point- but I wouldn't drive my decision based on that- I would archive them digitally to remove that concern completely. ...Should I reimburse myself from ... the HSA funds if I am not hitting the 401k limit yet? It depends. If it's a Roth 401k, all other things being equal, (you are able to choose the same investments with your HSA as you can choose in your 401K, and the costs are the same), then you are better off leaving the money in your HSA rather than pulling it out and putting it into the Roth 401k. The reason is that there is no tax difference, and once you put it into the 401K you (probably) can't touch it (for free) until you retire. With the HSA, if you could have taken a distribution but chose not to, then you can take that amount of money out anytime you want to without any consequences, just like your normal checking account. However, if you have a traditional 401k, and if taking HSA distributions would increase your cash flow such that you could afford to contribute more to the 401k, then this would lower your tax burden that year by reducing your taxable income." "There are many people who have deductions far above the standard deduction, but still don't itemize. That's their option even though it comes at a cost. It may be foolish, but it's not illegal.  If @littleadv citation is correct, the 'under penalty of perjury' type issue, what of those filers who file a Schedule A but purposely leave off their donations? I've seen many people discuss charity, and write that they do not want to benefit in any way from their donation, yet, still Schedule A their mortgage and property tax. Their returns are therefore fraudulent.  I am curious to find a situation in which the taxpayer benefits from such a purposeful oversight, or, better still, a cited case where they were charged with doing so. I've offered advice on filings return that wasn't ""truthful"". When you own a stock and cannot find cost basis, there are times that you might realize the basis is so low that just entering zero will cost you less than $100 in extra tax. You are not truthful, of course, but this kind of false statement isn't going to lead to any issue. If it gets noticed within an audit, no agent is going to give it more than a moment of time and perhaps suggest, ""you didn't even know the year it was bought?"" but there would be no consequence.  My answer is for personal returns, I'm sure for business, accuracy to the dollar is actually important." In some stores that is done. When I shop at the Apple store or at the Farmers market the receipt is automatically sent to my email address. Why don't others do it? If the target of the itemized receipt is a credit card company they would be sending data that they spent collecting to another corporation. The grocery store is collecting your data so they can sell it to their vendors. They sell to vendors the info that Gen X shoppers that buy cat food are more likely to use brand X laundry detergent then Millennials. The credit card companies could gather even more Meta data that they could sell. Privacy. Some people don't join the reward program at the store because they don't want a company to know exactly what they buy. Even fewer would want the credit card company to have that information.  The credit card companies would have to want this level of data that would have to be stored, maintained, and protected. You are in business for yourself. You file Schedule C with your income tax return, and can deduct the business expenses and the cost of goods sold from the gross receipts of your business. If you have inventory (things bought but not yet sold by the end of the year of purchase), then there are other calculations that need to be done.  You will have to pay income tax as well as Social Security and Medicare taxes (both the employee's share and the employer's share) on the net profits from this business activity.