If you intend to
deduct business travel expenses on your income tax return, keep adequate
records. If you are later audited, you will be able to substantiate your
deductions. Your oral summary of your business expenses will not hold up to an
IRS audit. Besides, audits are often a year or so after the events which make
it more difficult to recall what took place if you don't have proper
documentation.
The easiest way to
keep good records is to do so near the time the expense was incurred. Consider
using a large envelope for each trip to keep all receipts and other trip
information. Take a few seconds to write the business purpose and/or customer
names on the back of appropriate receipts. If you are lacking a specific
receipt, write your account of the event, the date, and the money paid out and
save it along with your other travel documentation. Take time also to document
the business miles travelled.
If you maintain an
expense report on a weekly basis for the expenses of that week, it will be
considered a timely kept record for IRS purposes. If you account to your
employer under an accountable plan, the rules are different.
For assistance in
setting up a record system for your business travel, please contact us.
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