Business Tax Deductions: How To Deduct Expenses Without Keeping Receipts

Business Tax Deductions: How To Deduct Expenses Without Keeping Receipts

No receiving, no deduction, right? Much conversation, all right. The mantra of small business bookkeeping has been relentlessly burdensome for decades: " No Receiving, No Deduction. "

My own tax clients are quick to brood over me of this basic recordkeeping rule. Over the years I ' ve heard this alive with times: " But I don ' t have any receipts. I guess I can ' t take the deduction, right? "

What ' s my response to the " No Acceptance, No Deduction " lament? " Not so fast! Wherever there ' s a tax rule, there ' s an exception to the rule. "

In certain situations, taking deductions without a receipt is actually sanctioned by the IRS. Here are three legal exceptions to the " No Obtaining, No Deduction " rule.

EXCEPTION #1: Vehicle Assessment You are allowed to deduct your vehicle expenses to the extent that you used your vehicle for business. If you drove your car 100 % for business, then 100 % of your vehicle expenses are deductible.

And you have two options for signal those vehicle expenses: 1 ) The Actual Charge Technique 2 ) The Usage Method

Our focus here is on Option #2 - - over with the Custom New wrinkle your vehicle amount is cleverly the number of business miles times the endorsed IRS hang-up degree.

For 2009, this ratio is 55 cents per mile. In 2009, if you drove your vehicle 10, 000 miles for business, you can report a deduction of $5, 500 - - without having to keep any receipts for gasoline, oil changes, repairs and maintenance, insurance, etc.

You do have to document your business practice via a written log of some sort, but this is regularly much easier than saving all those receipts for actual vehicle expenses.

EXCEPTION #2: Meals While Pilgrimage When caravan out - of - town on an overnight business trip, you can deduct the actual charge of your meals ( by keeping the getting ), or you can rely on the little known " Per Diem Rule " ( which requires no getting ).

The Per Diem Custom gives you a daily meal allowance for each day of the trip, depending on what part of the country you visit. For example, the per diem meal percentage for Birmingham, AL is $44; for San Francisco, it ' s $64 ( as of 9 / 30 / 08 ).

To find the per diem amounts for every state, go to: http: / / www. irs. gov / publications / p1542 / ar02. html

EXCEPTION #3: The $75 Dollar Rule Here ' s other easy way to avoid the hassle of saving receipts - - this one involves your business meal and spree expenses. Swear by it or not, the IRS does not have need a acceptance when your business meal or orgy equivalent is less than $75 per equivalent.

Sound too good to be true? Well, there is a " take ", of march: you reposing must maintain a enter of the alongside five facts agnate to the deductible conjuncture:

1 ) WHO did you eat with or carry? i. e. the names of the people and the quality of their business relationship to you

2 ) WHEN did the entertainment happen? i. e. the date

3 ) WHERE did the entertainment occur? i. e. the name of the restaurant or other venue

4 ) WHY did you meet? i. e. a description of the business purpose of the meal or event

5 ) HOW MUCH did you spend? i. e. the dollar amount

You should enter these five facts in a log. Your daily appointment book or day - digital watch is the perfect zone to jot this down in less than a minute. Having met the IRS investigation requirements, you can then propel away the receiving. In the ceremony of an fresh look, you ' ll be covered.

Two final comments: Exception #2 applies to overnight travel situations, regardless of whether you eat your meals alone or with business associates. Exception #3 applies to meals and entertainment expenses incurred when you are with someone with whom you have an existing or approaching business relationship, regardless of whether you are in town or in overnight travel class.