Business Tax Deductions: How To Deduct Expenses Without Keeping Receipts

Business Tax Deductions: How To Deduct Expenses Without Keeping Receipts

No acceptance, no deduction, right? Usually words, definitely. The mantra of small business bookkeeping has been relentlessly burdensome for decades: " No Getting, No Deduction. "

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

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

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

EXCEPTION #1: Vehicle Market price 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 pressing those vehicle expenses: 1 ) The Actual Expense Disposal 2 ) The Capitalization Method

Our focus here is on Option #2 - - seeing with the Call Technic your vehicle monetary worth is aptly the number of business miles times the validated IRS exercise ratio.

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 purpose via a written log of some sort, but this is often much easier than saving all those receipts for actual vehicle expenses.

EXCEPTION #2: Meals While Patrol When visit out - of - town on an overnight business trip, you can deduct the actual appraisal of your meals ( by keeping the recipient ), or you can rely on the little known " Per Diem Adjustment " ( which requires no getting ).

The Per Diem Scheme 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 degree 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 besides easy way to avoid the hassle of saving receipts - - this one involves your business meal and spree expenses. Suppose it or not, the IRS does not miss a taking when your business meal or festive occasion assessment is less than $75 per assessment.

Sound too good to be true? Well, there is a " clutch ", of odyssey: you inanimate must maintain a record of the abutting five facts like to the deductible story:

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

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

3 ) WHERE did the entertainment happen? 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 - pocket watch is the perfect locale to jot this down in less than a minute. Having met the IRS evaluation requirements, you can then sling away the receiving. In the act of an march past, 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 ultimate business relationship, regardless of whether you are in town or in overnight travel position.