There are any number of reasons why taxpayers might have no receipts to document the deductions taken when filing a tax return with the Internal Revenue Service. Perhaps you had no clue you would need proof of these expenses, or a fire, flood or tornado destroyed the documents you carefully collected. Plenty of people have walked in your shoes and found ways to reconstruct their records. With a little creativity and effort, you can, too.
File for a Tax Extension
Buying time may be the smartest thing you do for yourself if you lost or didn’t keep the tax receipts needed to reconcile your annual return. This extension isn’t a substitute for having verification that backs up your deductions, but you can use an extension to buy some time — at least enough to locate records that can help you reconstruct your deduction amounts.
If the reason you have no receipts is due to a natural disaster and you reside in a an area declared by the federal government to be a disaster region or zone, you may receive extra time to come up with your receipts. On the other hand, if you lost or didn’t keep backup documents, you must get your hands on duplicate records. Contact credit card issuers, your mortgage company, bank, utility companies, physicians and schools to request duplicate receipts of charges that can be deducted. You may be charged fees to research and produce some or all of these duplicates.
Reconstruct Journals, Logs and Records
If you track grocery, entertainment, travel or miscellaneous expenditures using a journal, log or record book, it will take a little more effort to re-create your records. Start by resurrecting calendar(s) from your computer, wall or purse. Use an online travel site — MapQuest, Google, Bing, Rand-McNally, Free Map Tools.com — to compute distances matching calendar dates. Average out your entertainment expenses based on your diary or appointment book as well. If you are required by your company to fill out expense reports, you may thank your lucky stars that you had to prepare these when trying to reconstruct your financial history.
Rely on Your Habits
If you can prove that, for example, you spend between $100 and $150 every month for gas but you don’t have receipts for a specific month, you can work with previous months’ totals and figure out a monthly average based on the records you have. The more months you can account for, the more likely your averaged figures will be accurate. Further, rely on your bank statements to piece together tax write-offs, particularly if you tend to pull cash advances from your personal account that may or may not be reimbursed by your employer. You can also consult e-records or refer to bank stubs, if you still use paper checks, to come up with the numbers.
You Don’t Have to Sleuth Out
If you typically spend less than $75 when you entertain or travel, you may not need receipts. Review Cohan v. Commissioner to discover that the IRS and the U.S. Tax Court both stipulate to accepting expenses without receipts as long as a filer (that’s you) makes a reasonable effort to find originals and/or track down duplicates. Site the Cohan rule whenever you like, or feel free to quote tax attorney Howard Levy: "You do not need receipts to prepare an accurate (and perfectly legal!) tax return. What you need is accurate numbers for what you spent.”
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