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Most freelancers assume they need to hoard paper receipts for taxes. In this video, we talk about why you don’t need paper receipts for every write-off you take.

If you’ve been freelancing, independent contracting, or running a small business for any length of time, you probably have a file cabinet, glove compartment, or random drawer full of paper receipts. But when tax time rolls around, chances are those receipts aren’t super readable anymore. They’re torn, the ink has rubbed off, and there might even be some food stains. How is this useful in an audit again?

Here’s the truth: The IRS WILL ask you for a record of your business expenses if you get audited. But it turns out, they don’t require this to be in the form of paper receipts at all. Bank and credit card statements will work for many expenses. Welcome to 21st-century bookkeeping!

You don’t always have to have a receipt if you make cash purchases for your work, either. As a general rule of thumb, definitely hang onto your receipt if you make a cash purchase for more than $75.

There are also some special rules for certain types of expenses: business travel, business meals, and business gifts. For these, you should hang on to your receipt if you spend more than $75, and keep a little extra proof on hand just to be safe. That can include calendar events and emails proving that your expense was for business purposes.

What happens if you lose your receipt for a big cash purchase? Don’t worry — you’re not out of luck. These days, chances are good you’ll have some digital breadcrumbs you can use as proof. Calendar events, emails, and PayPal and Venmo requests can help you reconstruct that expense.

TIMESTAMPS

0:00 - Intro
1:05 - Do we need paper receipts?
1:55 - What the IRS says about paper receipts
2:28 - How to keep records without hoarding receipts
3:03 - What to do about cash purchases
3:39 - Stop hoarding receipts!

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MORE ABOUT PAPER RECEIPTS FOR TAXES

https://www.keepertax.com/posts/recei...

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