Collaborate on Maintenance Receipt Format for Management with Ease Using airSlate SignNow

Maintenance receipt format for Management

let's talk about the irs receipt requirement because look if you want to write off qualified expenses then you're going to want some proof right like you're going to want a definite and clear way to substantiate any tax deduction that you decide to take and i get it right because i used to be one of those people that thought you need to keep up with every single tax receipt that you have with some type of giant file cabinet to meet the expectations of the irs hey sean look here's all my receipts for the 2022 tax year but look you don't need to keep up with every little receipt in fact many irs requirements aren't as strict as you might think so what i want to do in this video is cover a quick summary of tax deductions then i'll look at the receipt and documents that you want to keep track of and then lastly we'll talk about some tips on how to manage all your records for tax purposes so if all that sounds good to you then please consider lending me a helping hand by clicking the like button for the youtube algorithm so other people like you can find this video about the irs receipt requirements stay tuned [Music] hey there and if you're new welcome to our channel i'm sean with life accounting the accounting company to help you save on taxes and build more wealth as always what i'm gonna do is put the timestamps for this video down in the description below so that you can skip to the parts that you may want to learn the most about now before we dive in i'm curious and i want you to tell me okay are you currently keeping up with all your receipts yes or no and if yes tell me how down in the description below all right let's go ahead and dive in with number one a quick walkthrough of tax deductions now if you watch our channel a lot then you're probably already super familiar with what tax deductions are but i do think it's helpful to do a quick walk through so that you have proper context to how they work within the irs receipt requirements so of course every year taxpayers must submit their total income from every source which may include your w-2 wages your self-employed business or your side hustle income and any other forms of income now once you report all your income then you must submit your tax deductions which helps to determine the amount of income you will actually pay taxes on and this is also known as taxable income so its total income minus tax deductions equals taxable income okay you know this now the thing that gets most people in trouble is either a they don't know what qualifies as a tax deduction or b they don't know how to substantiate a tax deduction or provide evidence and this video is all about b now for individual taxpayers there isn't much effort required to substantiate tax deductions because okay look you're likely going to be receiving some type of tax forms for predefined tax deductions such as a 1099b form for selling stocks and cryptos or a mortgage interest statement which reports the amount of interest you paid on a mortgage or your retirement contributions or you may have charitable donation receipts and so on however businesses can write off almost anything so being able to substantiate a tax deduction is more critical for them because they won't receive some tax forms for the expenses that they take which brings me to number two how to substantiate a tax deduction so in general you need three things to substantiate a tax deduction number one you need the amount of the expense number two you need the time and the place for the expense and number three and this is important you need a business purpose which is usually ordinary and necessary now let's go ahead and review these requirements with a real irs court case so this guy named wallis was an airline pilot who worked as a real estate broker primarily dealing with commercial properties and he claimed more than fourteen thousand dollars in travel mill and entertainment business expenses but the irs took a look and they disallowed all the expenses so mr wallace appealed in the u.s tax court where he provided receipts for all his meals his lodging his transportation and airfare well he ended up losing the court case because he was never able to establish a believable business purpose for them for example he claimed travel and mill expenses for an 11-day trip to hawaii where the only business purpose was to scout potential properties for a client now already if i'm looking at this then i'm thinking hey maybe a one to three day trip to scout properties may be more reasonable but 11 days plus if you're going to take an 11 day trip to hawaii for business purposes then you better have set up an agenda like you better have tons of appointments booked before you leave like what i would personally want is a full detailed log of all the locations that i'm visiting how long i plan to be on each location and why exactly i might be scouting that particular area but instead let's take a look at what mr wallace actually did so records show that wallace paid for multiple hotel rooms for the same nights and that there were multiple occupants in the rooms which led the court to determine that the nature of his visit to hawaii was more so to go on vacations with others than for specific business purposes but then within one day of his return from hawaii he traveled to lake tahoe where he booked a town home and that also did not qualify as a business trip and that is why i tell people sometimes one small error or one small mistake can trigger an investigation into all your business operations and all your personal finance and respective tax deductions now i want to be clear that mr wallace did in fact have the proper receipts and documentation for his expenses so that wasn't a problem right the problem wasn't the fact that he lacked documentation but rather what he lacked was a business purpose okay so hopefully that story makes how to substantiate a tax deduction crystal clear now let's move on to number three and talk about what receipts you need to keep for tax write-offs now when we purchase things as business owners we normally have two types of payment methods right like we're either paying with cash or a business debit or credit card so let's talk about cash transactions first the irs receipt requirement for cash purchases is really simple okay if an expense is qualified meaning it is ordinary and necessary as a business expense then guess what you actually don't need a receipt for cash transactions under 75 unless it's related to lodging okay this is also known as the cohan rule so that's great news right like you don't have to worry about keeping up with all of these small receipts and transactions that you use cash for instead you only need to keep receipts where you spent more than 75 dollars in cash so if you took your clients and your partners out for a 300 lunch then you better make sure you keep up with that receipt and i'll share some tips on how you can do that in a second but first let's talk about what if you used a business debit or credit card well it gets even easier from here because ing to the irs supporting documents should accomplish the following okay it should identify the payee it should show the amount paid it should show proof of payment the date it was incurred a description of the item purchased which means documents such as credit card statements and bank account statements or invoices all qualify as supporting documentation which essentially means that you don't need to keep up with every single receipt if you are using a business debit or credit card for your expenses which is awesome because most banks will keep digital statements for you and the irs is legally required to accept digital forms of proof for any of your tax deductions so this means that you may be able to finally stop ordering all your receipts but if you still have a lot of cash transactions or you're just not comfortable with the idea of letting go of your receipts yet then you should at least feel comfortable knowing that you can take a picture of your receipt upload it to your computer or some type of cloud storage and that is enough to help you substantiate any tax write-off that you want to take but remember that just takes care of the documentation so it still is important to note the business intent and the business purpose related to the expense because remember just because you have a receipt doesn't make your tax deduction substantiated now let's move on to number four and quickly talk about documenting income now most people don't have a problem with documenting income right because many merchants will send a 1099-k form showing how much income has been processed for you by the way cash at paypal zell are soon joining the list of merchants that will send you those 1099 forms and i have a video breaking down the update which i'll link at the end of this video so that you can watch that after you finish this one anyway merchants will send a 1099-k form and for service-based companies it's normal for your clients or your vendors to send you a 1099 neck or a 1099 miscellaneous form and in general every entrepreneur loves to focus on how much revenues or how much sales they're making so it shouldn't be too difficult to track income from your main sales platform or your register nonetheless documenting income is still important if the irs has questions about your income sources and making sure that you're reporting it correctly now when it comes to all this documentation let's talk about number five how long do you need to keep these records for well ing to the irs you need to keep records as long as needed to prove the income or deductions on a tax return in general that means you want to keep records or documents that support your income your deductions and your credits for a period of three years after you file your tax return or the tax deadline whichever one is later for example if you file an individual tax return with a schedule c on march 18th 2022 you want to keep the records related to that return until april 15 2025 which is three years after the tax deadline for that 2022 return however it can be extended to up to seven years in certain circumstances such as claiming a bad debt deduction or even indefinitely if you are found not compliant with filing your taxes at all and remember it is okay if you decide to keep all your records digitally hey sean look i turned all my physical receipts into digital warnings now i'm not sure if the banks are required to hold your statements for seven years so just in case it's a best practice to store all your digital documents on your computer or on some type of cloud storage or both so that it can be accessed for years to come okay now let me share some helpful tips with you with number six how to manage and organize tax receipts so here's my list of tips number one go paperless okay use a business debit card a business credit card for all your business transactions as proof of your business expenses number two download and store your bank statements number three use a digital receipt app so you can store receipts for cash transactions over 75 dollars you just whip out your phone and scan the receipt and then upload it to an app you can use something like quickbooks for this which i'll go ahead and put my affiliate link to quickbooks down in the description below number four log the business purpose some people try to remember everything by memory but what i like to do is keep some notes okay one of the things i will do is i will write down the business purpose the meeting notes and so on before i digitize my receipts number five make sure you have proper bookkeeping combined with record keeping so within bookkeeping software is like quickbooks you can leave notes on certain transactions as well as attach receipts and spell out exactly what this receipt's business purpose was for all right now here's a very important note for business owners which is to remember any expense you take must be ordinary and necessary for your business for example if you're going to use the vehicle tax deduction you need to make sure your vehicle is being used for business and it is ordinary within your industry and necessary in order for you to maybe generate revenue all right i hope you enjoyed this video let me know if you have any questions or just tell me in the comment section what you think coming up next i have two more videos that you may enjoy as well so make sure you check those out if you haven't already and i'll see you over there