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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David E. Du Val, EA
Chief Compliance Officer for TRI Holdco

 

Dave Du Val, EA, is Chief Compliance Officer for TRI Holdco. Inc., the parent company of TaxAudit, and Centenal Tax Group. A nationally recognized speaker and educator, Dave is well known for his high energy and dynamic presentation style. He is a frequent and popular guest speaker for the California Society of Tax Consultants, the California Society of Enrolled Agents and the National Association of Tax Professionals. Dave frequently contributes tax tips and information to news publications, including US News and World Report, USA Today, and CPA Practice Advisor. Dave is an Enrolled Agent who has prepared thousands of returns during his career and has trained and mentored hundreds of tax professionals. He is a member of the National Association of Tax Professionals, the National Association of Enrolled Agents and the California Society of Enrolled Agents. Dave also holds a Master of Arts in Education and has been educating people since 1972. 


 

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