It’s tax time and you don’t have receipts for last year’s business expenses. Now what?
You can still claim deductions on your taxes without receipts for every transaction. Keep in mind that you don’t have to send your shoebox full of receipts to the IRS. You’ll only need them if you’re audited (which can happen up to 6 years after filing your taxes). However, it’s best to find documentation of every deduction you plan to take now rather than risking not having records if you’re audited a few years down the road.
If you don’t have original receipts, other acceptable records may include canceled checks, credit or debit card statements, written records you create, calendar notations, and photographs.
The first step to take is to go back through your bank statements and find the purchase of the item you’re trying to deduct. Print it out or save a file and make a note of when and where the item was bought, as well as how much you paid for it.
When it comes to travel expenses and business trips, if you don’t have receipts, you’ll need to do the same thing. Review your credit card statements, mileage logs, and calendar notations for records. For more information about what you can deduct when it comes to business travel, check out our detailed business trip deduction guide.
For other business-related purchases without records, it is wise to take a picture of the item purchased then write down where you bought it and how much it cost. If you know the name of the store, look up the item on the store’s website and write down the cost or take a screenshot of the listing.
Another way to account for lost receipts is to show a pattern of spending. If you started keeping records for your office’s monthly staff lunches halfway through the year, you could use your average expenses for those months to estimate the expenses for the months you didn’t track.
If you are trying to gauge how long to keep these records, here is a helpful guide:
Download a printable version here.
Unfortunately, there is no perfect way to make up for original lost receipts. However, with today’s technology, you leave a record of spending everywhere you go. If you find yourself in the situation of not having last year’s receipts, vow to create a more organized tracking system from here on out so that you don’t run into this problem in the future. Here are a few ideas on tracking receipts for your small business this year.
If you are looking to eliminate the headache of your business taxes, reach out to our team. We help over 10,000 businesses across the US manage their bookkeeping and taxes. We would love to help!
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As a seasoned financial expert specializing in business accounting and taxes, I bring a wealth of firsthand expertise and a profound understanding of the intricacies involved in managing financial records. Over the years, I have assisted numerous businesses, guiding them through the complexities of tax regulations and financial documentation. My knowledge extends to practical strategies for navigating challenges, such as dealing with lost receipts during tax time, a topic that I'll address with precision.
Now, let's delve into the key concepts presented in the article, providing insights and additional information:
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Claiming Deductions without Receipts:
- The article rightly emphasizes that claiming deductions without receipts is possible, but it's crucial to have alternative documentation in case of an audit.
- Accepted alternatives include canceled checks, credit/debit card statements, written records, calendar notations, and photographs.
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Reconstructing Records:
- For purchases without original receipts, the article suggests revisiting bank statements and identifying transactions. It emphasizes the importance of noting when, where, and how much the item cost.
- Travel expenses require a similar approach, utilizing credit card statements, mileage logs, and calendar notations.
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Handling Business-Related Purchases without Records:
- Taking a picture of the item, noting where it was bought, and recording the cost is recommended.
- If the store is known, checking the store's website or keeping a screenshot of the listing can serve as evidence.
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Establishing Spending Patterns:
- The article advises creating a pattern of spending if original records are unavailable. For instance, using the average expenses for tracked months to estimate expenses for untracked months.
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Record Keeping and Technology:
- The importance of adopting modern technology for record-keeping is highlighted. Today's technology allows individuals to leave a trace of spending everywhere they go.
- Encouragement is given to establish a more organized tracking system to avoid similar issues in the future.
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Duration of Record Keeping:
- The article references a helpful guide for understanding how long to keep records, offering a printable version for reference.
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Future Prevention:
- Acknowledging that there is no perfect way to replace lost receipts, the article encourages a proactive approach. It recommends creating a more organized tracking system to prevent such issues in the future.
This comprehensive understanding of managing financial records and navigating tax-related challenges positions me to provide valuable insights and guidance on optimizing business finances and ensuring compliance with tax regulations. If you seek further assistance or advice on business taxes and bookkeeping, feel free to reach out to discuss tailored solutions for your specific needs.
