IRS Receipt Requirements: Do I Need a Receipt for Every Expense?

Do I need a receipt for every business expense?

Mostly yes in practice, though the law requires a receipt in only some cases. Every deduction must be provable, and a receipt is the usual proof. Federal rules require books or records sufficient to establish the deductions on a return, from any person subject to income tax or required to file an information return, so sole proprietors, partnerships and corporations are all covered. The IRS tells businesses to keep receipts, canceled checks and other documents that support a deduction, and requires no special kind of record except in a few cases (IRS: Recordkeeping).

When a receipt is required by rule depends on the kind of expense:

Sources: Publication 583, 26 CFR 1.274-5 and Publication 463.

A case is not simple when most expenses have only a card line, when a year of spending has no purpose notes, when travel, gifts or car use are involved, or when the IRS, a preparer or a lender has already asked for proof. For receipts already lost, see lost receipts for business expenses.

Gather:

• Receipts, invoices or order emails for each expense.
• Statements for every account and card that paid business costs.
• A note of purpose for each expense: what it was for and which job or client.
• Calendars or itineraries for trips, and a mileage log for car use.

Do I need a receipt for purchases under $75?

The no-receipt line exists only for travel, gift and car costs. Under $75, those costs need no receipt but still need a record of amount, date, place and purpose; lodging needs a receipt at any amount, apart from the per diem case below. Supplies, software, rent and advertising have no cutoff: a small one must still be provable. Publication 463 says documentary evidence is not needed in three cases:

• A meal or lodging cost on a trip that an employer reimburses at a set daily rate (a per diem allowance) under an accountable plan, meaning you account to the employer for it. An employee related to the employer cannot use this exception and must be able to prove the expenses to the IRS. Related includes owning, directly or indirectly, more than 10% of a corporate employer's stock by value, and certain family and trust ties (Publication 463; Revenue Procedure 2019-48, section 6.07). A meals-only per diem is a separate rule; see business meals deduction.
• An expense other than lodging that is under $75.
• A transportation expense for which a receipt is not readily available.

The $75 cutoff waives the receipt, never the record. The amount, date, place and business purpose of each expense must still be recorded, generally in writing (26 CFR 1.274-5T; Publication 463).

The cutoff applies to each expenditure. Publication 463 treats each separate payment as generally a separate expense, but expenses of a similar nature during a single event as one expense.

The cutoff belongs to the travel, gift and car rules, not to ordinary costs. Neither 26 CFR 1.6001-1 nor Publication 583 sets a dollar floor for supplies, software or advertising, so a small ordinary purchase still has to be provable. For small cash payments, Publication 583 lists petty cash slips among the documents for expenses: each payment from a petty cash fund gets a slip attached to its receipt as proof of payment.

What must a receipt show to count?

A receipt is ordinarily adequate when it shows the amount, date, place and essential character of the expense, meaning what was bought (26 CFR 1.274-5). The IRS gives two examples (Publication 463):

These examples come from the travel and meal rules. For documentary evidence generally, the regulation describes the same four items as ordinarily adequate: amount, date, place and what was bought. A receipt seldom shows why the purchase was made, so a purpose note goes with it. If a slip shows only a total, add the invoice or order email that shows what was bought.

Is a bank or card statement enough without a receipt?

Usually not on its own. A statement proves that you paid, not what you bought or why. Publication 583 lists account statements among the documents for expenses and accepts a highly legible one as proof of payment when it shows the payee's name, the amount and the date (plus the check number for a check), but adds that proof of payment by itself does not establish a deduction: keep invoices or sales slips that show you incurred the cost.

A line that shows only a merchant name or code is the usual gap: the same store can sell supplies for a job or something personal. For lodging and for travel, gift or car costs of $75 or more, the regulation asks for documentary evidence such as receipts or paid bills. Neither the regulation nor Publication 463 says whether a statement line alone counts. Keeping the receipt avoids the question. If only statements are left, see lost receipts for business expenses.

What proves the business purpose of an expense, and what do I write down?

Business purpose is generally proved by a written statement of the business reason, kept in an account book, diary, log, statement of expense or similar record; a record made on a computer counts (Publication 463). The degree of proof varies. When the purpose is clear from the surrounding facts, a written explanation is not required: a sales representative on an established route needs no note for each trip on it, though the route length, trip dates and total miles are still recorded (Publication 463; 26 CFR 1.274-5T).

Write what ties the cost to the business, in a line:

You need not copy onto your record what the receipt already shows, as long as the two complement each other (Publication 463). For ordinary costs, Publication 583 asks that supporting documents show the amount paid and that it was for a business expense; a short note kept with the receipt can do that.

Which expenses have stricter rules: lodging, travel, gifts and car use?

Travel (including meals and lodging while away from home), gifts and listed property such as a passenger car get a stricter test. No deduction is allowed unless you substantiate the amount, the time and place or description, the business purpose and, for a gift, the business relationship (26 U.S.C. 274(d); 26 U.S.C. 280F(d)(4)).

Source: Publication 463, Table 5-1 and 26 CFR 1.274-5T.

A receipt is the usual way to meet these rules, not the only one. If a record falls short on one element, the statute also allows proof by your own detailed statement plus corroborating evidence, and for amount, time and place that evidence must be direct or documentary (26 U.S.C. 274(d); 26 CFR 1.274-5T(c)(3)). Publication 463 also allows other evidence in exceptional circumstances, when the nature of the situation meant you could not get a receipt and your evidence is the best proof possible. For lost records, see lost receipts for business expenses.

Amounts you approximate or estimate are not deductible under these rules (Publication 463). The standard meal allowance and the standard mileage rate replace records of actual cost only; time, place, business purpose and business miles are still required (Publication 463).

A meal on a business trip is a travel expense under these rules. A local business meal is not: the statute's list covers travel meals, gifts and listed property, and Treasury says food and beverage expenses stay subject to the general rules to establish an expense and keep books and records (26 U.S.C. 274(d); Treasury Decision 9925). So the travel receipt cutoff does not decide a local meal. Keep evidence of the amount, date, place, who attended and why. How much of a meal is deductible is in business meals deduction, and what a mileage log must show is in mileage log requirements.

How soon should I write the purpose down?

At or near the time of the expense. For travel, gift and car costs, a record made then and backed by documents has a high degree of credibility that a later statement lacks, because recall fades; a later statement needs corroborating evidence of high probative value to carry the same weight (26 CFR 1.274-5T).

A contemporaneous log is not required. A log kept weekly that accounts for that week's use counts as timely, as long as you write it while you still have full knowledge of the amount, time, place and purpose (Publication 463; 26 CFR 1.274-5T). For other costs, Publication 583 warns that you may forget expenses unless you record them when they occur.

Do I send receipts in with my return?

The IRS tells businesses to keep receipts and supporting documents, and its recordkeeping guidance says nothing about sending them in with a return. The records must stay available at all times for inspection, and if the IRS examines a return you may be asked to explain the items on it (Publication 583; 26 CFR 1.6001-1).

The sample weekly worksheet in Publication 463 tells you to attach receipted bills for all lodging and for other expenses of $75 or more to that worksheet; the publication does not direct you to send it with your return. How long to keep the records is in how long to keep business records.

Example

These examples are illustrative and use US dollars.

A consultant flies to a client

A consultant flies to a client workshop: US$420 of airfare and one hotel night at US$180. The hotel receipt is required at any amount. The airfare is above the $75 line, so the ticket receipt is required unless it is not readily available. A note with the dates and "client workshop, Austin" proves place and purpose. A trip meal of $75 or more also needs its receipt, unless you use the standard meal allowance, which replaces the cost record but not the time, place and purpose. How much of a meal is deductible is in business meals deduction.

A handyman buys supplies on a card

A handyman buys US$60 of supplies on a business card. The amount is under the line, but supplies are an ordinary cost, so the line does not apply and the cost must still be provable. The statement shows only the store. The store receipt or order email shows the items, and a note, "bathroom remodel job," ties them to a customer.

An online seller with unclear card lines

An online seller has US$900 of card charges in a month, several shown only as an abbreviated marketplace name. The statement proves payment. The marketplace's order history shows what was bought and when. Without it, a line may be hard to tie to the business or to tell apart from a personal purchase, and a note on each order says whether it was resale stock or supplies.

Different for you?

• Someone is asking you for proof (an IRS letter, a preparer or a lender), and many expenses have only a card line, or one or more years of spending have no purpose notes: which expenses can be supported now, what to rebuild from statements, and what monthly books should capture are judgment calls on your facts. See bookkeeping help, and IRS audit of a small business if a letter has arrived.
• Receipts are lost or were never kept: see lost receipts for business expenses.
• You keep receipts as photos or in an app, and want to discard the paper: see scanned receipts instead of paper.
• You want a routine for the year and a list for your bookkeeper: see record keeping for the self-employed, or weigh doing your own books or hiring a bookkeeper.
• Your corporation or partnership has owners or staff spending for it: the entity must keep records that establish its own deductions (26 CFR 1.6001-1). For costs an owner pays personally and is repaid, see reimbursing owner expenses and business expenses on a personal credit card; if personal and business spending share the same accounts, see bookkeeping.
• You are checking which Schedule C lines draw questions: see Schedule C expenses the IRS questions.