I received a LOT of comments and questions after posting about the need for RECEIPTS in order to substantiate your business travel deductions. Yes, you need receipts but no, there is no receipt jail if you dont have receipts.
So let’s assume that you don’t have receipts (beased on the comments and feedback I received, this is not uncommon!), you can still deduct all your business expenses to which you are entitled however if you are audited, the auditor will likely ask to see receipts. If you cannot provide these receipts, then the IRS may deny your deductions. In my twenty five years of experience, I have never seen all of a taxpayers deductions denied because of lack of receipts.
The IRS will usually negotiate a percentage with you based on who you are as a taxpayer. For example, have you always filed timely? Have you paid all taxes due? Then the auditor is more likely to allow more of your deductions. This isnt a science and more of an art but the important piece I want you to understand is that yes, we like to have all our receipts to prove our tax deductions but if we dont have our receipts, all is not lost.
Make sense? Reach out to me to discuss if you still have concerns.
And look out for THOMAS which launches next week, THOMAS is going to teach you all about Travel, Home Office, Meals, Auto and Supply expense deductions in just 4 hours.