Taxes: Can I use my bank statement records in place of reciepts for the purpose of itemized expenses?

April 6, 2005 10:40 PM

I have income this year as an independent contractor (web designer) which complicates my tax return enough where I'd like to pay a visit to a good accountant. Problem is, I have kept little in the way of reciepts for many qualified purchases throughout the year. (Bad, I know.) Instead of a tidy reciept folder, can I print up my whole year in bank statements with appropriate transactions circled and bring to my accountant? Will this hold up if I were ever audited?
posted by FearTormento to work & money (8 comments total)

You can try. I do that sometimes but I TRY to keep all my real receipts. If you can, ordering stuff online is a good idea if everything costs the same, 'cause you can usually just print out another receipt by logging in to your account with the merchant.
posted by pwb503 at 10:56 PM on April 6, 2005

I'm not a tax accountant, but I've heard that obvious job-related purchases like "Office Depot" and "PC Warehouse" will probably be okay if you just have the bank statement. The likelihood that you'll be audited is pretty slim, though, as the IRS has been cutting back on its auditing staff. Unless they suspect you are stiffing them out of a lot of money, they probably won't bother auditing you. Taking the home office deduction increases the chances you'll be audited, but I ran my own business for five years and never triggered whatever makes them do an audit.
posted by kindall at 11:13 PM on April 6, 2005

Most retailer's have POS systems that can reprint your receipts. Whether or not they're willing to do so is another question. I'm guessing they would for big-ticket items, not for knick knacks.
posted by randomstriker at 11:17 PM on April 6, 2005

Bank receipts? Did you pay for these by check, or are you talking about credit-card statements? My accountant said credit-card statements showing purchases at appropriate places were enough. I don't think you will need individual receipts, unless you make your business purchases at Wal-Mart. IANATA.
posted by Kirth Gerson at 5:00 AM on April 7, 2005

Have you used TaxCut or TurboTax in the past? My wife used to be a "Kitchen Consultant" (in-home shows) and we used TT for returns. Their instructions were always very clear to me and they found lots of extra things I wouldn't have thought of (and not sure a standard accountant would take the time to ask). And the software is bound to be much less expensive than an accountant.
posted by Doohickie at 6:00 AM on April 7, 2005

These are credit card statements, (or check card purchases) so the level of detail would basically be date, retailer, and amount of purchase.

From how it's shaping up, it looks like these will do fine in other's experiences.

Doohickie, I'm using TurboTax for the Web right now and have in the past, but I feel like this time around I'm making too many guesstimates on things which could ultimately affect the bottom line. I might as well finish the excercise, as I'm sure it would be helpful for whichever accountant eyeballs my return anyways, so it's not a wasted effort.
posted by FearTormento at 8:01 AM on April 7, 2005

In practice you don't need diddly squat in the way of receipts - they take you at your word. It's if you're challenged on it that you need them and as someone else mentioned the likelyhood you will be challenged is slim.

I don't know that there IS an exact standard for what would be required in an audit. IANATL but I suspect that credit card statements that are from reasonable places and within reasonable amounts (ie, you're not claiming to have spend $1000 on paper in support of your web design business) are unlikely to be a problem.

It will also likely factor into it if you're claiming $8,000 in expenses to make $2,000 in income and if you're still paying taxes when all is said and done. Claiming big side business losses to offset income in other areas is a lot more likely to get you the IRS smackdown.
posted by phearlez at 11:13 AM on April 7, 2005

At my last place of business (consisting of mostly tax lawyers and Enrolled Agents with the IRS), were told that Quicken records could take the place of actual receipts, bank statements, and credit cards statements during an audit. You should be fine. Also, as phearlez mentions, unless you are claiming ridiculous amounts of expenses for small income, I wouldn't worry about it.
posted by blackkar at 11:48 AM on April 7, 2005