17 Reasons to Retain Paper Receipts

By ingrained habit, I collect and keep sales receipts. They dwell in an accordion file folder that has twelve compartments—one for each month. I retain every receipt because I don’t know in advance which particular one might end up being useful.

In a digital age, attending to slips of paper might seem quaint. But I believe it’s worthwhile. This routine has saved me money many times and it only takes a few minutes out of each year.

Maybe you’ll decide that this type of record keeping is for obsessives. If so, that’s fine. But I hope you decide to join the obsessives and get your own accordion file. With so few receipt keepers around, it’s getting lonely out here—and after all, Moosery loves company.


1. Sales Tax Deductions
In certain years, IRS rules permit taxpayers to deduct paid sales taxes in lieu of state income taxes. I’ve opted for the sales tax deduction twice. In 2009 it saved my household $118 in income taxes and in 2013 it saved $147. Without receipts it would have been impossible to claim the deduction. (Note: the sales tax deduction is unavailable for tax year 2014 unless Congress takes affirmative action to reinstate it.)

2. Health Savings Accounts and Medical Deductions
We use our HSA accounts as a retirement savings vehicle and pay out of pocket for uninsured medical expenses. Still, there may come a future year in which we need to draw down on these accounts. If so, we can use our accumulated medical receipts from prior years to support penalty-free withdrawals. Alternatively, our uninsured medical expenses in any given year may support a tax deduction to the extent they exceed 10 percent of our adjusted gross income. Without receipts, the deduction might not survive an audit.

3. Self-Employed Business Expenses
Receipts provide proof of work expenses reported on Schedule C.

4. Increases to Property Tax Basis
The tax code provides limited exclusions for capital gains arising from the sale of residences. It’s hard to tell whether you’ll exceed the exclusion limits until the time finally arrives to sell your house. If you keep receipts of any home improvements, you can use them to increase the tax “basis” of your property and thereby reduce your capital gains. You should also keep receipts for all improvements to any vacation or rental properties. For more about your property’s tax basis, see IRS Publication Nos. 523 and 551.

5. Sales Tax Rates
By reviewing sales receipts, you can find the best places to spend your money. For example, not far from my house, there’s a small haven of restaurants where the sales tax rate is only 4.5% (sales taxes elsewhere average 8.5%, and some places they’re even higher). I prefer to dine where taxes are lower (it helps prevent indigestion).


6. Returns and Refunds
Some retailers require receipts for returns while others don’t. It would take extreme diligence to remember each store’s policies. I think it’s much easier to simply keep receipts for all of them.

7. Post-Purchase Price Matches
My Target receipts came in handy last month. I had bought two neon yellow tops for $14.99 each (for high visibility when biking). The following week, their price dropped to $12.00. I grabbed the relevant receipts, presented them at the customer service desk, and my Mastercard was credited $6.47 (tax included).

8. Warranties
Stores and manufacturers typically want to see an original receipt before they honor any warranties.

9. Renters and Homeowners Policy Claims
I keep a file of receipts for my biggest purchases: furniture, electronics, and appliances. I’ve never had to make a homeowner’s claim, but if I ever do, this paperwork will show the full extent of my loss.

10. Reimbursements From Others
Receipts come in handy when you file expense reports for work or seek repayment from friends for purchases made at their behest.

11. Notes to Self
I track expenses at If I need to adjust to a given transaction—for example, if the purchase reflects a gift—I write a note on the receipt and account for it manually at the end of the month.

12. Detailed Analyses
In the past, I’ve been curious about my spending at Costco. So at year’s end, I’ve gathered the receipts and prepared an item-by-item analysis. I’ve done this enough years to know that about 65% of my Costco purchases are for bulk food items. (I could have guessed that at the outset and saved myself a lot of accounting.)

13. Correction of Errors
On rare occasions, the shelf price differs from the amount charged, items get double scanned, or the waiter’s tip is misstated. If you keep your receipts and look at them, then you can get these errors fixed. Otherwise, ignorance is bliss (but it’s no way to manage your spending).

14. Memory Aids
Receipts help me remember wines I’ve liked and places I’ve visited. Last year, a live CNN report showed a Massachusetts diner that I vaguely recognized. It took a couple minutes, but I located the receipt and confirmed that I had been there the previous January. Without that slip of paper, I might have pondered about this for months!

15. Coupons and Special Offers
The face of a receipt (or its reverse side) often contains rewards for the observant.

16. Email Privacy
Some stores have started offering receipts delivered via email. In light of last year’s credit card debacle at Target, there’s ample reason to keep your email addresses private.

17. Your Consciousness of Spending
Increasingly, we live in a cashless world where spending has become far too convenient. You swipe a card, grab your bag, and you’re done. There’s little to memorialize the purchase. However, when you take a receipt and keep it on file, the intangible becomes more tangible—and the routine helps you think a bit about where your money goes.

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If you decide to retain your sales receipts, how long should you keep them? My practice is to shred receipts after three years except in the following cases:

• Keep any receipts relating to tax deductions for at least seven years after the pertinent tax return is filed (store them with your return).

• Keep any receipts relating to real estate improvements until the property sells. If you end up using the receipts to adjust the tax basis, keep the paperwork for at least seven years after the pertinent tax return is filed.

• Keep receipts of big ticket purchases indefinitely in case you ever need to report a loss under a renters or homeowners policy.

• For medical receipts in support of future HSA withdrawals, keep them until the withdrawals actually occur. After that, keep the receipts for at least seven years after the pertinent tax return is filed.

4 Responses to 17 Reasons to Retain Paper Receipts

  1. Kathy May 15, 2014 at 7:57 AM #

    Years ago, during a tax audit, the auditor was going to throw out our deduction for sales taxes but I pulled out all my receipts. When he saw how many sales tickets he would have to spend time totaling, he simply allowed the entire deduction!

    • A Noonan Moose May 15, 2014 at 8:07 AM #

      Thanks Kathy! Your terrific story demonstrates the overwhelming powers of thermal paper—even IRS agents cringe at the sight of it. 😉

  2. Free To Pursue May 16, 2014 at 10:28 AM #

    LOL. I gasped when I saw the title of this latest post. I had just thrown out 3 years of receipts this morning! Imagine my relief when I read through your list and realized that I had not made a terrible mistake. Phew!

    We do keep all receipts that are associated with taxes and business expenses. As for other receipts (which is what I was discarding), I enter each of the amounts by store and payment method in a trusty spreadsheet and only keep receipts associated with warrantees, reimbursements or returns/exchanges. That way, I can see our spending by month/type/store and method of payment.

    Thanks for another useful post, despite the fact that my heart did skip a beat initially. 😉

    • A Noonan Moose May 16, 2014 at 1:23 PM #

      Gonna have to do a post now on cheap defibrillators!

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