How can I track my IRS business write offs?

Answer 1

Good Records!

If you want to spend just a little bit of money, I really like Intuit's Quicken Home & Business. (for more advanced options and more $$, use QuickBooks). If you set it up correctly, you'll be able to link it to TurboTax or print tax reports at the end of the fiscal year. Many Accounting Firms can help you set the program up correctly, and a lot of community colleges offer courses in using Quicken/QuickBooks for small businesses.

ADDED: I had a brain freeze and forgot to mention - I have some training in accounting, enough to know it's more than what I want to do. I take my reports & logbook to a local CPA who specializes in doing taxes for the guys in my husband's industry. I use Quicken to keep a running total during the year and to make sure I've got everything gathered up that my CPA needs. (I also keep all the traditional proof of expenses organized in files in storage boxes)

Answer 2

This is an area where many people end up missing deductions or duplicating expenses or taking expenses they're not entitled to, thinking they're doing it right. Over 27 years as a tax accountant, I have seen just about every muddle-headed attempt to keep business records. It doesn't matter which software you use because, if you don't know the tax law and accounting principles, you will likely put a lot of time and effort into this and produce a pile of garbage.

To cite but one of potentially thousands of ways people go off track, let's look at business expenses paid by credit card. Joe pays his credit cards by personal check. Come tax time he goes through his checkbook and credit card receipts and receipts for cash purchases. Joe comes across the checks he wrote to pay his credit cards and he thinks these payments must be business deductions. He is dead wrong. Only the interest paid on the business expenses provides a deductible expense. The business expenses themselves were incurred when they were charged to the credit card and are fully deductible at that point, not at the point the credit card company was paid. In most cases, the credit card balance is not paid in full each month, so when the end of the year comes, many business expenses do not get deducted because people mistakenly think they must pay the credit card bill before a deduction can be taken. Conversely, many people make the mistake of deducting both the transactional receipts and the credit card payments for the same expenses, thus duplicating items.

The IRS LOVES it when untrained people try to use these commercial software packages; it brings the IRS so many more sheep to slaughter.

DIY = DWYG (do it yourself equals deserve what you get)

Answer 3

Your question is kind of vague. Be more specific.

You could pay for everything by check, and keep an accurate checkbook.

You could enter every transaction in a spreadsheet, and print it out monthly.

Answer 4

By keeping careful WRITTEN records. And by saving all receipts.

Answer 5

By keeping good records.