How can I deduct things when it comes tax time when I don't have receipts for them. For some of the expenses, they were charged to the business credit card so they appear there, and some there were checks written. I have what the items were for in QuickBooks, but obviously that may not be sufficient for tax purposes, or is it?

You can deduct the cost of anthing but that doesn't mean that you would be allowed the deduction if you were audited and of course it might be considered as tax fraud. Most IRS agents just want some form of proof that you have a legit deduction. If you get a young female agent they might give you a lot of trouble as they have a chip on their shoulder and are out to prove that you are a dishonest person. Not picking on females, its just my experiance over many years.

The requirement of recordkeeping and receipts depends upon the type of entity you are:

If you are self-employed sole proprietor the requirement is very lax and as I said before you generally just have to have records and receipts but you do not have to have formal bookkeeping. You of course should have, just not required.

If you are a corporation, you are required to maintain a formal bookkeeping record using formal accounting methods to properly reflect your income and expenses. Those records require receipts for most items, however, generally you do not have to have receipts for travel overnight meals and misc away travel expenses if less than $75. However, you do still have to document the business purpose, date, time, etc. of the travel.

Best rule of thumb when the IRS is involved----when in doubt, don't take the deduction. Just not worth the risk of being audited and having the items deemed incorrect or worse--fraud.

We have nothing to fear but fear itself! Fear is the weapon of mass deception for the IRS. The IRS is weak with few agents and can only audit a minor amount of todays taxpayers. Most of the IRS agents themselves do not understand the tax law as it has been "simplified" so many times that it is now extremely complicated. The IRS relies on fear to keep most honest and maybe that is not all that bad. The truth is you should take any and all deductions that you actually have and worry about the IRS if they come calling. If the IRS disallows your deduction then they simply collect the tax you would have paid anyway plus a penalty which is actually an interest calculation that they call a penalty so you can't turn around and claim a deduction for the interest. Fraud is only if you have under-reported your tax information by 25% or more. So forget the fear of the IRS and run your business for a true accounting and reporting of profits and you can sleep good at night.

Would you believe that due to low income and child credits (a form of welfare) it was best to not take many deductions this year for a tax return I prepared for one of my small construction business clients. I actually got the client more tax refund by not taking some of the business deductions. Its time congress did away with the individual income tax and put preparers like me out of the individual tax business. Why should I and the public have to go through this tax mental masterbation every year? What do you think?

my 2???

I'm with OldJack on this one. Do try to keep receipts for all business expenses, and keep them on file for several years out. However, if it truly was a business expense, enter it into your books anyway. If you don't have a receipt, document it as well as you can, even if that just means writing on a piece of paper the who, what, where, when and why and sticking that in the file.

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Peter T Davis
Frixer, Inc.
Helping people make profitible businesses on the web.

The receipts are for my benefit only, correct? It proves that the transaction did exist, and in the event of an audit, then they are provided, correct? I'm sure the IRS doesn't want to fish through hundreds of copies of receipts to make sure all my math is right unless they really have to.

You are correct. The reason the IRS has tax forms is so you will add up your receipts and fill-out the forms. You really don't think the IRS gives a damn if you have receipts or not do you? If on audit they ask for your proof and you don't have the receipts, you make their day.. and they just disallow everything.

my 2???

Well come on, it may be amusing for them to have everyone stress out about making copies of everything they are deducting :-D Thank you