Importance of Tax Records
Don’t underestimate the importance of tax records. Amounts spent to conduct business are generally deductible on your tax return, but you may have to prove the expenses. One married couple was denied business deductions claimed by the husband. The U.S. Tax Court noted that some of his expenses were estimated rather than verified by records, implausibly large, and not tied to business activities. Travel costs, such as hotel bills, weren’t properly documented and were vague in nature. So his deductions were limited to amounts allowed by the IRS. (TC Memo 2018-44)