5 Apps for Organizing Your Expenses at Tax Time
As tax season approaches, taxpayers throughout the country are likely scrambling to organize receipts for deductions like medical costs, charitable donations, or business expenses. A slew of smartphone apps are aimed at simplifying the process and helping users go paperless by scanning and organizing receipts.
But are scanned receipts acceptable documentation for the IRS?
Yes, according to Robert W. Hampton, a CPA with Fort Worth, Tex.-based Impart Financial, LLC. "A technologically savvy person should have no fear about using scanned documents in the event of an IRS audit," he says. "The only caveat would be that when scanned, but before they shred the originals, they want to be sure that all the relevant details are legible."
Simply having a receipt isn't enough to make the case for a deduction, adds Julian Block, a Larchmont, N.Y.-based tax attorney and author of Tax Tips for Small Businesses. Block suggests writing down the purpose of a business meal or other purchase before scanning the receipt or notating the business purpose elsewhere.
If you're planning to go paperless this tax season, here are five apps to consider:
Using the Lemon.com website or free apps for iPhone, Android, BlackBerry, or Windows Phone, users track expenses, create summary reports, and assign categories such as health or business expenses. Scanned receipts are converted into searchable, taggable data using OCR (optical character recognition). Users can also add email receipts by forwarding to a special @lemon.com email address or having ecommerce emails bypass the regular inbox and sent directly to Lemon. The site offers a free basic plan and, starting in February, will offer a data plan for $9 per month or $50 per year or a family plan (linking up to 10 Lemon accounts) for $3 per month or $20 per year. Come March, a business plan will be available for $4 per month per user.
Expensify accounts include 10 receipt SmartScans per month, unlimited receipt uploads and expense imports, and Evernote syncing. SmartScan technology uses OCR and, if necessary, scans can be flagged for review by one of the site's human technicians. Users who need their expenses reports in a specific format can add expense rules to help automate the process. Expensify also integrates with Freshbooks and Quickbooks, but those features are only available with paid accounts. Users pay 20 cents for each additional SmartScan beyond the 10 allotted each month or earn bonus SmartScans by inviting others to join. Expensify also allows users to import a bank account or credit card to get an even more detailed look at their finances. Expensify's free mobile apps are available for iPhone, Android, BlackBerry, and Windows Phone.
In addition to scanning and digitizing receipts and invoices, Shoeboxed.com organizes scanned business cards and allows users in the United States and Australia to mail in documents for scanning using prepaid envelopes. Shoeboxed uses a combination of OCR and human data verification to ensure accuracy. After a free 30-day trial (which includes 50 document scans), users pay $49.95 per month for a business plan (which includes a back-up CD), $29.95 for the classic plan, or $9.95 per month for the "Lite" plan. There's also a free DIY plan that allows users to enter data for up to five documents per month themselves rather than mailing documents. All plans include an online shopping email address. Shoeboxed offers free iPhone and Androids apps.
Doxo syncs accounts with insurance providers, banks, mortgage lenders, and other companies so users can store statements and pay bills digitally, reducing the need for paper statements. If a provider isn't already on the site, users can scan statements or take a photo on a smartphone and upload the image. However, details like the amount or company name need to be entered manually, as doxo doesn't automatically extract that information from the receipt. The site can also store notes on calls with customer services or confirmation numbers. Currently, this free tool offers Web-based features and an iPhone app, but an Android app is in the works. In addition to receipts and bank statements, users can store warranties, passports, and other important documents in the cloud.
Instead of monthly or annual plans, iXpenseIt's iPhone app costs a flat fee of $4.99 for the full version. Users can also try iXpenseIt Lite for free. The app can store photo receipts, but, as with doxo, users need to manually enter data from the receipt. The app's real focus is on tracking daily expenses on the go and understanding how those expenses fit into a monthly budget. With that goal in mind, the app can generate a wide variety of reports and graphs to illustrate a user's spending habits. The app also sends reminders for users to enter daily expenses.
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Personal Finance - 5 Apps for Organizing Your Expenses at Tax Time
(c) 2012 U.S. News & World Report