Receipts for Taxes: What Do You Need to Keep?

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Across America, Real Estate Investors continue to stuff their wallets and glove compartments with paper receipts.

Keeping track of paper receipts is stressful. They're easy to misplace, tear, or smudge. And by tax time, the ink has likely rubbed off the paper — which might be little more than torn pocket lint by that point anyway.

Here's the liberating truth about paper receipts: they’re not your only option for recordkeeping. In many cases, they’re not even your best option.

What the IRS says about paper receipts

Real Estate Investors often think they need physical receipts for every single tax deduction. That's actually a myth. To debunk it, we're going straight to the source — the IRS.

The IRS says to keep records for your business tax deductions indicating:

  • What you bought
  • When you bought it
  • How much you spent

And guess what? It doesn't mention requiring paper receipts at all. There is an exception. A receipt is required if you make an out-of-pocket cash purchase for > $75.

What kind of records can you use for your taxes?

You can satisfy the IRS’s need for documentation with two simple things:

  • Bank statements
  • Credit card statements

This comes directly from the IRS’s list of ways you can substantiate your expenses. In its own words, the “documents for expenses include the following”:

  • Canceled checks or other documents reflecting proof of payment / electronic funds transferred
  • Cash register tape receipts
  • Account statements
  • Credit card receipts and statements
  • Invoices

Your bank statements are the “other documents reflecting… electronic funds transferred” mentioned in the IRS’s list of acceptable docs: the 21st century’s answer to canceled checks.

You’ll notice that the old-school paper receipts that clutter file folders and shoeboxes — those “cash register tape receipts” — don’t even appear at the top of the list.

Both bank and credit card statements tend to contain all the critical information: what, when, and how much. And if you track your expenses with Digb, we'll automatically scan your accounts for write-offs and generate the necessary records for you.

This article is provided for illustrative purposes only; it does not provide personalized tax, legal, financial, or other professional advice. Your situation may be different; consult a professional for information concerning your individual tax, financial, or legal situation before taking any action.