What is required to substantiate expenses?

A taxpayer must substantiate by adequate records or by sufficient oral or written evidence the following types of expenses:

1.     Traveling expenses including meals and lodging while away from home.

2.     Entertainment expenses.

3.     Business gifts.

Since 1985, taxpayers have been required to answer questions on their returns regarding the business use of an automobile including:

1.     The total number of miles driven during the year.

2.     The total number of business miles driven during the year.

3.     Whether the vehicle was used for commuting and, if so, the distance normally commuted.

4.     Whether the vehicle was available for personal use in off-duty hours.

5.     Whether another vehicle was available for personal use.

6.     Whether adequate records or sufficient evidence exists to justify the deduction and whether or not the evidence is written.

Taxpayers are required to substantiate the following elements:

1.     The amount of each expense or other item.

2.     The time and place of the travel, entertainment, amusement, recreation, or the date and description of the gift.

3.     The business purpose of the expense or other item.

4.     The business relationship to the taxpayer of the persons being entertained, or receiving the gift.

Adequate records or sufficient evidence include the following:

1.     Account books, diaries, and logs.

2.     Documentary evidence (receipts, paid bills).

3.     Trip sheets.

4.     Expense reports.

5.     Written statement of witnesses.

If a taxpayer does not have adequate records to substantiate his expenses, or if he cannot supply sufficient oral or written evidence thereof, no tax deductions or credits will be allowed with respect to an item. It should be noted that Congress has emphasized that different types of evidence have different degrees of probative value and that oral evidence alone has considerably less probative value than written evidence.

Attention: Tax Law is subject to interpretation. Please be advised that the material contained on this Web site is for information only and is not intended to be a substitute for professional legal advice. The Stewardship Services Foundation endeavors to update the information on this site on a regular basis, but cannot guarantee its accuracy at all times.