Trying to pay estimated tax for having worked with 1099?

Question

From late last year, I made only about 6 thousand bucks. I am trying to claim business related expenses, but don't have all the receipt. However, my credit card statements show transactions that I'm missing the receipts for. Would it be advisable to use what's on the credit card statements to claim the deduction OR is it a one way to get my a$$ fried and have tax evasion charge on my record?

Also, is there anyway to claim cash transaction for business related expenses, but you do't have the receipts.

Answer 1

If you are to be taken seriously in case of an audit, documentation is required to show legitimate business expenses. Credit card statements can support business expenses.

Just because an expense is on a credit card doesn't document that it is a business expense. For example, if it is a meal, you would need to have a record of who was at the meal and the business purpose of the meal. If it were an airplane ticket, you would need to have a record of the business purpose of the trip. You would need this additional documentation even if you had a receipt.

If you had a credit card statement for a specialized piece of equipment used only in your business, or for consumable products used only for your business, that would probably be acceptable documentation.

A cash transaction may be acceptable if you had your own record made at the time of the transaction as to what business purpose the transaction served. A large cash transaction would likely require a receipt. Constructing records of cash transactions after the fact would not be acceptable.

Answer 2

If you claim the amounts you have credit card statements to show, but not receipts, if you get audited they might be disallowed, but you wouldn't be charged with tax evasion.

Cash transactions - unless the total is really small, I'd stay away from that.

In 2007 make sure that you have receipts for all expenses.