IRS Receipt Requirements for Self-Employed

If you’re self-employed or a small business owner, you must keep receipts for all business expenses you want to claim as a tax deduction, no matter how big or small. 

Paying attention to the IRS receipt requirements makes it easier to prepare for tax time or a potential audit. Keep reading to find out the kind of records you must have on hand and for how long.

IRS receipt requirements

The IRS guidelines for receipts apply to any transaction you want to claim as a business deduction on your taxes. Here’s what information needs to be visible in order to meet the IRS itemized receipt requirements:

• Payee’s name and address
• Amount paid
• Proof of payment
• Date incurred
• Item description

Other eligible documentation includes:

• Canceled checks
• Proof of electronic funds transfer
• Cash register tape receipts
• Credit card receipts or statements
• Invoices

In addition to tracking receipts for your expenses, you should keep records of your gross receipts (which show your income) and any charitable contributions you can deduct. However, the IRS charitable donation receipt requirements only apply if you itemize deductions on your individual tax return. 

Find out more about itemized vs standard deductions in our other guide. 

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IRS requirements for receipts under $75

One common tax-related myth is that purchases under $75 don’t have to be documented. Unfortunately, that’s not true. 

If you want to claim a deduction for any purchase or expense, you must keep proof that adheres to the requirements stipulated above. 

There are certain expenses you can claim without receipts, or with other proof.

IRS meal receipt requirements

In some instances, you may be able to deduct meal and entertainment costs, but only if they directly relate to your business. According to the IRS, meal receipt requirements include entertaining clients, customers, or employees at any recreation, amusement, or entertainment venue. 

However, whether or not the meal itself is deductible depends on whether the expense is directly related or associated. If there’s no correlation between the event or meal and any kind of business activity, it can’t be deducted, and you don’t need to keep a receipt. 

Also read: Self-Employed Tax Deductions

How long do you need to keep receipts?

In most cases, you need to keep business receipts for each tax year for 3 years from the date you file. However, the IRS requirements for expense receipt record keeping change if certain situations apply.

Take a look at these examples: 

How to organize your receipts

All of the IRS business expense receipt requirements are the same whether you opt for paper or digital copies. It’s perfectly acceptable if you prefer to scan copies or import digital documents from your online records. The IRS just states that your electronic storage system indexes and stores your copies in a legible way. 

You can either create your own electronic filing system or use an app that tracks and stores receipts for you. 

There are no legal requirements to keep paper copies if you have a reliable electronic system in place.

What to do if you lose your receipts

If you happen to get audited and don’t have all of your receipts for business expenses, you may be able to recreate the information from additional sources, as listed in the first section above. 

Another option is to request a receipt from a vendor, even after the fact. 

Finally, remember that in the eyes of the IRS, you’re ultimately responsible for keeping records on hand for the correct amount of time. Understanding the IRS requirements for expense receipts makes tax season much less stressful. It also ensures you can confidently take the maximum deductions for your small business. 

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