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What Are the Different Types of Tax Receipts?

C. Mitchell
C. Mitchell

In its most basic sense, a tax receipt is any record or documentation that tax has been paid. There are many different kinds of tax receipts. The most common are sales tax receipts, which indicate how much sales tax a person has paid in a given transaction. All business taxes, income taxes, and sales and use taxes also generate receipts.

Most of the time, the purpose of a tax receipt is to prove that tax has been paid, so as to avoid double taxation or non-payment penalties. A tax receipt essentially serves as documentation that can be presented to taxation or customs authorities as evidence of tax law compliance. In some settings, tax receipts can be used for reimbursement or refund, as well.

Woman holding a book
Woman holding a book

Travelers can often seek reimbursement from sales or value-added tax (VAT) paid abroad by saving their receipts and presenting them to the appropriate customs officials. Most of the time, sales tax and VAT are designed to apply only to residents. Foreigners who make purchases abroad that are subject to these taxes can often seek reimbursement by saving their tax receipts. This kind of reimbursement typically only works across borders. Differences in U.S. states’ sales tax rates cannot usually be equalized with reimbursement.

Receipts can also be used to claim refunds on self-prepared tax returns. The United States has one of the most robust self-filing tax systems in the world. U.S. tax law basically assumes that all citizens are subject to the maximum amount of tax, but then invites individuals to claim deductions in order to lower their overall obligation. Receipts are required to substantiate the vast majority of deductions.

Any claimed business expense, for instance, must usually be corroborated with an original sales receipt. Charitable donations claimed as deductions, too, often require a detailed receipt identifying the donation and its estimated value. These receipts are not tax receipts that demonstrate tax paid, like a business tax receipt or an income tax receipt. Rather, they are receipts used for tax purposes. This is a different sort of tax receipt.

A tax receipt can also be an accounting from a tax collector back to an individual tax payer. This sort of use is rare, but was made popular by the United States’ 2011 “Federal Taxpayer Receipt Program.” The program, which is online, purports to reveal to each taxpayer the specific causes and budget funds to which tax dollars were funneled over the past year. The federal receipt is essentially a sales receipt presented to citizens indicating what exactly was purchased with money remitted in taxes.

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