When Do I Need Receipts for IRS Schedule C Expenses?
Internal Revenue Service Form 1040 Schedule C is used by taxpayers to claim self-employment income. The form gives a place to list income and expenses that you pay to make that income. When you subtract the expenses from the income on the form, you have a total amount to enter on your Form 1040 as income. If the subtraction results in a negative number, the amount can be entered on form 1040 as a loss. As with most forms from the IRS, correct documentation is critical to verify what you are claiming. The most common documentation used is receipts for purchases, but you should also use ledgers or a journal.
Advertising
Keep receipts for any money that you spend on advertising for your business. Advertising includes radio and television ads as well as newspaper or print ads. Promotional pens or other giveaway items with your business name also qualify as advertising expenses.
Car and Truck Expenses
Care and truck expenses are deductible on a Schedule C. You should save receipts for fuel and oil purchases. All vehicle maintenance receipts should be kept as well. Do not forget about any automotive purchase buyer's orders for a business vehicle or a vehicle that is used in business some of the time because part of the purchase may be able to be claimed as an expense. Tolls and parking are small amounts that can add up over time, so be sure to ask for receipts for these.
Insurance
Save your statements for any business insurance that you buy. Fire and theft insurance that is paid to protect business assets is a deductible expense. Liability insurance to protect you against legal liability for accidents or negligence while you are conducting business is another deductible insurance expense.
Office Supplies and Office Expenses
Keep receipts for paper, pens and other supplies. Include that new computer that you use for business expenses. Office supplies and expenses are deductible on Schedule A on Line 18.
Travel, Meals and Entertainment
A percentage of expenses that you spend on travel, meals and entertainment for business reasons are deductible on Schedule C. The travel must be for a legitimate business purpose. You should note with each receipt the people you were with and the nature of the business that was discussed.
Proving Expenses
Keep good records of your business expenses and have enough evidence to support your business deductions. In most cases, this means the receipts for the expenses, but canceled checks or bills also provide evidence. Keep a ledger or computer based record of business expenses as they occur; it provides better evidence than a statement that is prepared after the fact.
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