No proof of business write-offs?

Question

I'm technically an "independent contractor" but I didn't keep any reciepts last year. I received the advice to just write stuff off anyway (my write-offs are definitely unsubstantiated, I pretty much guessed because I didn't keep records, and I filed already). I'm realizing that I'm really worried about an audit and this isn't worth it- I would rather re-state my expenses (decrease them a lot) and get on a payment plan with the IRS. Does anyone have any advice of what I can do? If I file a 1040X, will that trigger an audit anyway? And can I get on a payment plan if I file a 1040X? Or should I just not do anything and hope I don't get audited? What will happen to me if I get audited don't have reciepts to back anything up? I know this is stupid and I should have thought about it before, but this is my first year as an independent contractor...

The entire business income was roughly $22K, and with mileage, supplies, cell phone, entertainment, travel, new computer I wrote off around $16K... I'm in college, though, so I had some loans to help with my living expenses.

Answer 1

Depends on what sort of writeoffs you are taking. is it mileage, you can start a mileage log, to estimate your claimed mileage.
Did you buy things on credit cards, or checks, you can get copies of statements to back up what you claimed.

Answer 2

No proof of business write-offs?

There is no such thing as a 'No Proof' write off in an audit. Filing a 1040X does not automatically trigger an audit, but it does force the IRS to manually process the amendment. If your amendment decrease expenses significantly, they are likely to wonder why and suspect you can't show receipts. If the deductions you claimed are reasonable for the industry, you are probably better off leaving your 2006 return alone and keeping receipts from now on.

Answer 3

Its hard to guess what to do as we'd have to know what your gross for the year was and how much you are "writing off". If it seems you have more expenses than what your taking in they will look at that carefully. This year the IRS has checked over a bunch of Independents that seemed way off from the industries. Not having receipts in an audit is bad and as someone suggested, definately bring in a representative to go with you, its worth the money for them to be there. I wouldn't amend your taxes as then they'll look over your return very carefully (expecially if theres a big difference from original to amended return) and may warrent a audit for that alone. Its best to keep a log book and honestly, online there are a few expense charts you can print up so you can have the totals beforehand. I have regular mailing envelopes that I keep with different things in them (gas, tolls, food, ect.). the hardest to remember is gas with prices nowadays :)

Answer 4

If you are audited, the IRS will want you to produce receipts for your expenses. The first advice I will give you is:

DON'T GO TO YOUR AUDIT ALONE!

Get a representative that has been to audits before and knows your type of business. Representatives can be CPA's, Attorneys or Enrolled Agents.

The IRS will look at all your expenses and make a determination if it is "Ordinary" and "Necessary" for the operation of your business.Sometimes, they will allow expenses without documentation. For example, if you run a pizza shop and make your own crust, you need to buy flour, pepperoni, sausage, pizza boxes, etc.

They actually have done studies on many types of businesses at various income levels to see what expenses are needed and can determine if they are reasonable for your situation.

In the future, always get receipts for your purchases and other expenses and never guess what you think they might be.