Are Credit Card Statements Considered Sufficient Records For The IRS?
When you make a purchase at the store or online your transaction is recorded electronically so that it can easily be reviewed at a later date. This is very convenient for those of us who lack the time, or even the patience, to collect receipts or to record purchases. I know that many people use these credit card statements when doing their taxes, and comb through the past year to look for any deductible expenses.
So is your credit card statement sufficient proof of your deductible expenses?
Generally, no. While credit card statements can be used as proof of the purchase, proof of payment alone is not sufficient to prove that your deduction is allowable. You need to keep other documentation to prove that your deduction is, in fact, an allowable deduction. This is especially true when deducting travel, entertainment, gift or transportation expenses.
What are adequate records?
To prove that your expense is an allowable deduction, the IRS generally wants records of where the expense took place, when the expense took place, who was there, and a general statement of the business purpose. You should keep this information in an account book, diary, log, statement of expense, trip sheets, or similar record. You should also keep documentary evidence, such as receipts, canceled checks, or bills, to support these records. All your records should be timely-kept as records created at the time of the event, or shortly thereafter, are more valuable than reconstructed records.
If you have incomplete tax records make sure you consult a tax attorney about your options. Feel free to contact us today.