Business Tax Deductions: How To Deduct Expenses Without Keeping Receipts

Business Tax Deductions: How To Deduct Expenses Without Keeping Receipts

No taking, no deduction, right? Usually utterance, of course. The mantra of small business bookkeeping has been relentlessly burdensome for decades: " No Obtaining, No Deduction. "

My own tax clients are quick to remember me of this basic recordkeeping rule. Over the years I ' ve heard this multifarious times: " But I don ' t have any receipts. I guess I can ' t take the deduction, right? "

What ' s my response to the " No Receiving, No Deduction " moan? " Not so fast! Wherever there ' s a tax rule, there ' s an exception to the rule. "

In certain situations, taking deductions without a acceptance is actually sanctioned by the IRS. Here are three legal exceptions to the " No Recipient, No Deduction " rule.

EXCEPTION #1: Vehicle Monetary worth You are allowed to deduct your vehicle expenses to the extent that you used your vehicle for business. If you drove your car 100 % for business, then 100 % of your vehicle expenses are deductible.

And you have two options for front-page those vehicle expenses: 1 ) The Actual Amount Routine 2 ) The Purpose Method

Our focus here is on Option #2 - - because with the Way Wrinkle your vehicle amount is plainly the number of business miles times the certified IRS purpose degree.

For 2009, this degree is 55 cents per mile. In 2009, if you drove your vehicle 10, 000 miles for business, you can report a deduction of $5, 500 - - without having to keep any receipts for gasoline, oil changes, repairs and maintenance, insurance, etc.

You do have to document your business appropriateness via a written log of some sort, but this is repeatedly much easier than saving all those receipts for actual vehicle expenses.

EXCEPTION #2: Meals While Wandering When promenade out - of - town on an overnight business trip, you can deduct the actual amount of your meals ( by keeping the receipt ), or you can rely on the little known " Per Diem Scheme " ( which requires no taking ).

The Per Diem Form gives you a daily meal allowance for each day of the trip, depending on what part of the country you visit. For example, the per diem meal scale for Birmingham, AL is $44; for San Francisco, it ' s $64 ( as of 9 / 30 / 08 ).

To find the per diem amounts for every state, go to: http: / / www. irs. gov / publications / p1542 / ar02. html

EXCEPTION #3: The $75 Dollar Rule Here ' s supplementary easy way to avoid the hassle of saving receipts - - this one involves your business meal and mingle expenses. Take it it or not, the IRS does not lack a recipient when your business meal or gala charge is less than $75 per rate.

Sound too good to be true? Well, there is a " grasp ", of visit: you quiescent must maintain a record of the meeting five facts coextensive to the deductible development:

1 ) WHO did you eat with or get? i. e. the names of the people and the complexion of their business relationship to you

2 ) WHEN did the entertainment happen? i. e. the date

3 ) WHERE did the entertainment befall? i. e. the name of the restaurant or other venue

4 ) WHY did you meet? i. e. a description of the business purpose of the meal or event

5 ) HOW MUCH did you spend? i. e. the dollar amount

You should enter these five facts in a log. Your daily appointment book or day - digital watch is the perfect area to jot this down in less than a minute. Having met the IRS touchstone requirements, you can then pitch away the receiving. In the fact of an column, you ' ll be covered.

Two final comments: Exception #2 applies to overnight travel situations, regardless of whether you eat your meals alone or with business associates. Exception #3 applies to meals and entertainment expenses incurred when you are with someone with whom you have an existing or coming business relationship, regardless of whether you are in town or in overnight travel rank.