Tax myth: You must keep paper receipts
It’s quite common to think that you need to have a receipt for every tax deduction claimed at the end of the year. Every year, millions of Americans nationwide hoard receipts in their glove compartments, wallets, and shoe boxes. Is it true?
The IRS says: keep records.
“You may choose any recordkeeping system suited to your business that clearly shows your income and expenses”
The IRS says nothing about paper receipts specifically. All it says is to keep records that clearly show your transactions. If you’re masochistic like us, feel free to read the whole post on IRS.gov.
What else might we all have that records transactions?
It’s the 21st century, people! Any purchase you make with a credit card, bank account, payment platform, etc are automatically recorded for you in a bank statement. These statements contain all the critical information needed to constitute an expense record: merchant name, date, and amount. Oftentimes, there are additional details emailed to you that can be pulled up if necessary.
In fact the IRS specifically calls this out later in the post:
“For most small businesses, the business checking account is the main source for entries in the business books.”
What about cash purchases?
Maybe you sometimes leave the card and buy things with cash. A car wash, a gas fill up, maybe. That’s fine. As long as you keep a record of the purchase, you still don’t need a paper receipt for expenses below $75 (read the full details here). If you’re often buying things with cash for $75, you should probably consider getting yourself a credit card so you can get points! Jokes aside, there are certain circumstances where you’ll want to track your cash expense receipts but it’s far from common.
It’s the 21st century, people!
Stop filling your pant pockets and wallet with crumpled pieces of paper. Stop leaving money on the table because you lost that gas receipt from 8 months ago. Sit down with your bank statements at the end of the year and use our tax write off guides to add up your tax deductible expenses. Or, just just sign up for Keeper and we’ll automatically find track of your tax write offs for you :)
Bottom line: Don’t hoard paper receipts. Use Keeper instead.
This post originally appeared on the Keeper Tax Blog
