A recent Tax Court opinion illustrates that an employee who attempted to deduct business expenses but did not have the proper records was denied the tax deduction.  Generally, a taxpayer must substantiate all deductions by maintaining records that establish that they are entitled to take the deduction.   Travel, meals and entertainment expenses require more stringent records including amount, time and business purpose.  The record should be written and must be prepared at or near the time of the expenditure.  Going back and reconstructing the record will typically not be acceptable.  Remember to keep all receipts and keep adequate records for all tax deductions.  I recommend that my clients reuse the envelope I mailed their tax organizer in to keep all receipts throughout the next tax year.  At year end all receipts and records are kept in one place, much easier to gather together at tax time!   

Adequate records are just as important for individual tax payers as they are for business tax payers.  If you are going to deduct the expense, you must have a record that substantiates the expense.   Keep these records with the prepared tax return; this way you will always have the backup with the tax return. 

If you have questions on what to keep and what information is required please give us a call. 

Lipinski Accounting & Tax Services, LLC
Nancy S. Lipinski, Certified Public Accountant

Cell:  720-810-6990
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