The IRS loves receipts.... We suggest you save them

June 04, 2014 by Dave Du Val, EA
Rolled up receipt

Hey Dave,

If you have a dedicated credit card for your business, can you use the statement as the receipt for your business entertainment, meals, travel, etc.?

Lorne

 

Lorne,

Logically you would think so, but, generally, a credit card statement alone would not meet the IRS’s strict documentation requirements. In an audit, the IRS will want to see proof of what specific items were paid for. For example, what if the business-only credit card includes a charge for a massage? The fact that the charge is on a business-only credit card does not make the expense a business deduction (but it may be). And that is not to say for sure that an individual IRS examiner would not accept it; each IRS agent has his or her own level of leniency when it comes to missing documents.

Generally speaking, in order for entertainment, meals and travel expenses to be allowed in an audit, you would need to be able to prove that the expenses are directly related to your business. The IRS requires receipts showing the amounts and dates of the payments, the business purpose, the names of the people you met with or entertained and what business you discussed.

Deductibly Yours,

Dave

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Rhonda D. Guillory, EA
Learning and Development Manager

 

Rhonda was a Seasonal Tax Return Reviewer at TaxAudit before joining the permanent staff as an Audit Representative in 2009. She has a Bachelor of Science in Computer Science and worked in the Information Technology field for 15 years before making a career change. Since transitioning to the field of income tax in 2003, she has prepared and analyzed hundreds of tax returns. Rhonda enjoys helping taxpayers and tax professionals learn and understand the fascinating world of income taxes. Currently, she is the Learning and Development Manager.


 

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