Documenting tax deductible expenses is important in case of an IRS audit, as the IRS requires adequate records to support each deduction. Photographing receipts with a smartphone provides documentation that can be uploaded and stored in the cloud. This ensures the documentation is not lost and can be accessed if needed for an audit years later. Apps are also available to easily track mileage for vehicle deductions. Taking pictures of odometer readings with date and purpose can document business vehicle usage stored in cloud folders. Proper documentation is key to claiming deductions and avoiding disallowed amounts.

1. cookmartin.com https://cookmartin.com/tax-deductible-items/
Nathan
Shields
August 27,
2015
Documenting Tax Deductible Items
Documenting your tax deductible expenses is crucial to have in
the event of an IRS audit. The IRS requires you to keep adequate
records to support each deduction. Written or computer prepared
evidence is more reliable than oral evidence. You cannot deduct
amounts that are approximate or estimated.
Often when preparing a tax return, a client will say “I don’t have
any documentation so I can’t deduct it.” With today’s technology,
it is easier than ever to document and get the deduction you are
entitled to. An easy way to keep the necessary documentation is
to take a picture of the receipt with your phone.
An example of documentation in action is a lunch meeting with a
client. To properly deduct the meal you need the date, amount,
location, who was there, and a brief note about what the meeting was for. The receipt that you receive will have the
date, amount, and location. If you write down on the receipt who was there and what it was for your documentation is
done. But what happens if you lose the receipt between the time of the lunch and the IRS audit 2 years later? The
deduction could be disallowed because you don’t have adequate documentation.
A solution to this problem would be taking a picture with a smartphone of receipts. You can then have your phone set
to automatically upload your pictures to Microsoft’s One Drive every time you connect to Wi-Fi. If you are using
QuickBooks Online you can enter the transaction into QuickBooks from your smart phone, and take a picture through
the QuickBooks Online app. The picture is tied to the transaction in QuickBooks. You are then able to see the picture
when you open that transaction on your computer or tablet.
There are also a number of apps available to make tracking mileage easy. A quick search on Google Play showed a
bunch of apps that are free, or cheap to buy. If you are using One Drive, you could create a spreadsheet that is saved
on One Drive that you can keep up –to-date easily. If you like taking pictures, an option would be to take a picture of
your odometer with something indicating the date and what the business purpose was. Then the picture can be
uploaded to the cloud and moved to the correct folder.
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