I understand it's for tax write-offs, but what do I do concerning the receipts?
2006-10-20 20:27:03 · 9 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
For taxes if you are audited, also in case you get sued or have to sue someone for payment you can prove what you did and purchased. Just get a file cabinet or file organizer and put them in by month or category, whichever you find easier. I bundle them up at the end of each year and put in storage for 7-years.
2006-10-20 20:31:40 · answer #1 · answered by nativeAZ 5 · 0⤊ 0⤋
The logic is regarding backing up your deduction if you are audited. Say you spend $1000 on tools. If you can't prove it to an IRS agent, they will take that deduction away from you. You will then pay back tax on the $1000, back self-employment taxes, interest, and possibly penalties as well.
Get a shoebox or a kitchen drawer and stuff your receipts in throughout the year. Sort them at the end of the year when you do your taxes. You'll then know exactly what you spent and be able to survive any audit.
2006-10-21 06:58:34 · answer #2 · answered by lizzit 3 · 0⤊ 0⤋
You cannot remember everything you buy for your business so you need your receipts and cancelled checks to fill out your ledger sheet showing various type expenses; so you can fill out your Federal Sch C showing how much you make or lose in each tax year. The receipts are proof that you actually had the expeses. Guard them with your life as without them you have no proof unless you want to spend a lot of time backtracking and getting duplicates. An old adage for you; "Do it right or do it over".
2006-10-23 11:00:42 · answer #3 · answered by acmeraven 7 · 0⤊ 0⤋
You get a nice tax break that may add up to a hefty refund..........if you do your taxes yourself you can include the reciepts when you file. You enter the total on line 20 of Schedule A, and fill out form #4562 (Depreciation and Amortization), and either form 2106 or form 2106-EZ. I hope this helps :)
2006-10-21 03:45:52 · answer #4 · answered by john_reclude 2 · 0⤊ 0⤋
keep them in files, and separate them for each job, or write on the back which job they came from. IT is for audits, but also for your customers if they question your pricing. If you ever get dragged into court because someone says you ripped them off, you will want them.
2006-10-21 03:37:21 · answer #5 · answered by krissy 5 · 0⤊ 0⤋
Proof for the write offs
2006-10-21 03:30:40 · answer #6 · answered by infernal_seamonkey 4 · 0⤊ 0⤋
In the event of an audit, those receipts can be your saving grace....
2006-10-21 08:20:10 · answer #7 · answered by boston857 5 · 0⤊ 0⤋
uuhh.. Trust me dude.. the IRS don't fool around. If they see one tiny discrepancy in your tax files, they will audit you in a heartbeat. That means you have to account for every cent you've made and where it has gone! Sux big time!
Save them ALL, organize them, file 'em!!
2006-10-21 03:32:42 · answer #8 · answered by RAVEN 2 · 0⤊ 0⤋
Tax audit....
Also, if you decide to expand the business, it shows the lender how you have been doing!
2006-10-21 03:29:44 · answer #9 · answered by Dan821 4 · 0⤊ 0⤋