I always dread tax season, but my credit card's year-end summary helps me stay organized and maximize deductions
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- In the past, my husband and I have prepared for tax season by going through all our credit card statements and highlighting any tax-deductible items.
- Things are much simpler now that we have a card that offers a year-end summary with category breakdowns.
- We can quickly see how much we spent within a particular category, and this helps us save money by identifying tax-deductible expenses.
- Most cards offer year-end summaries with category spending breakdowns, from Visa Signature cards like the Chase Sapphire Preferred Card to cards from American Express.
- See Business Insider's list of the best rewards credit cards »
I regret that taxes weren't a required class in high school or college. Given all the complicated laws - and the fact that it's something we all have to deal with in one way or another - it's disappointing that we're not better prepared to take on this task. Even with straightforward programs like TurboTax, filing for taxes can be daunting.
The tax season in my house is stressful, as I'm sure it is for a lot of Americans. However, there is one trick that helps us stay more organized, and that's to use our credit card (a Visa Signature card issued by our bank, USAA) for as many purchases as we can. Here's why it saves us a lot of headaches when tax season rolls around.
Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which will far outweigh the value of any points or miles. It's important to practice financial discipline when using credit cards by paying your balances in full each month, making payments on time, and only spending what you can afford to pay back.
Not only does this give us rewards on our spending, but it also means that all of our spending is available for tracking in one place. If we can pay for something with our credit card, we do - so much so that the magnetic strip wears out before the expiration date on the card. We also try to pay the balance each month in full, so we don't get hit with big interest payments.
My husband and I have been using our credit card this way for years, and it used to be that at the end of the year, he would hand me a highlighter and a print out of all of our credit card statements and I would go through the year and highlight anything that was tax-deductible, and he would do the same. It was time-consuming, but it was a way to have almost all of our deductions (although we save receipts) in one place. It took us each a couple of hours to do this, but can you imagine how long it would take if we had to wade through a year of unorganized receipts?
Having a printout of our credit card statements was great, but a few years ago, our credit card company upped the organizational game so much that it now only takes us a glance to see what our deductibles are. At the end of the year, we can print out a statement from our account that has categories like medical, groceries, gas, entertainment, cellphone charges, and utilities. So, for example, we know exactly how much we spent on medical without going through the whole list of charges.
A printout like this not only saves us time; it also saves us money, because we always overlooked deductible expenses or purchases in the past.
Credit cards that offer year-end-summaries
Most credit cards offer this organizational tool - here are some highlights:
- American Express cards, including the Platinum Card® from American Express and the Blue Cash Preferred® from American Express
- Chase cards, including the Chase Freedom Unlimited, the Chase Sapphire Preferred, and the Chase Sapphire Reserve (excluding Chase's business credit cards)
- Discover cards, such as the Discover it® Cash Back
- Visa Signature cards, such as the Chase Sapphire Preferred and the Marriott Bonvoy Boundless Credit Card
In most cases, you can export your year-end summary as an Excel, CSV file, or PDF.
When tax season rolls around, log into your credit card account and check to see if you have a year-end summary. If your credit card doesn't break your spending down for you, you might want to consider looking into a new card - the time and headache it saves during tax season is worth it.
If you pay your tax bill with your credit card, consider that another bonus as you rack up rewards for travel or cash back. Every hack we can use to save a minute or stretch our dollars means more time and money to do something relaxing after stressing out about paying taxes.
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