What Tax Deductions Can You Claim Without Receipts?

  • Accracy
  • 26th Nov, 2023

While we all know that there are certain tax deductions we can take if we have the receipts to back them up, did you know that there are some tax breaks you can take without receipts? That's right—no need to rummage through old shoeboxes or file cabinets full of paperwork. This post will show you common small business deductions you can claim, even if you don't have documentation.

What Tax Deductions Can You Claim Without Receipts?
Tax Tips

What does the IRS allow you to deduct (or "write off") without receipts?

Note that you should keep receipts for all business expenses you want to deduct whenever possible. If an IRS auditor comes knocking, having that documentation will make the audit process go much more smoothly.

However, there are specific types of deductions you can safely claim without a receipt.

Keep in mind that it's always a good idea to speak with an accountant or tax specialist to find out what deductions are available to you, as not everyone is eligible for each deduction.

 

Self-employment taxes

If you're self-employed, you're responsible for paying your own Medicare and Social Security taxes, also known as self-employment taxes. This lets you deduct half of those taxes from your income, lowering your federal income tax bill.

If you use tax software to prepare your return, the software will automatically calculate the amount to deduct.

Home office expenses

If you have a home-based business, you may be able to deduct a portion of your rent or mortgage, utilities, insurance, and other home-related expenses under the home office deduction. The key here is that you must use your home office exclusively for business purposes; a dedicated room isn't required, but the space must not serve any other purpose.

You don't need receipts for most home office expenses, but you should have other documentation, such as:

  • Rent. Canceled checks or bank statements and a copy of your rental agreement can document rent expenses.
  • Mortgage interest. Your lender should send you a Form 1098 showing how much mortgage interest you paid during the year. You may also find this information by logging into your account online.
  • Real estate taxes. You can usually find this information on your Form 1098, an annual statement from the county assessor's office, or by looking up your property on the assessor's website.
  • Utilities. You can usually access copies of your monthly utility bills or payment history in your online account.
 

Self-employed health insurance premiums

If you're self-employed and have health insurance, you can deduct the cost of your premiums from your taxes. This deduction is available even if you don't claim itemized deductions on Schedule A.

If you don't have receipts, use a copy of your policy's declarations page or download your payment history from your insurance company's website.

Self-employed retirement plan contributions

Contributing to a qualifying retirement plan like a traditional IRA, SEP-IRA, or solo 401(k) is not only good for your future—it's also good for lowering your tax bill in the present. The amount you can deduct will depend on the type of retirement plan you have, but regardless, it's worth taking advantage of this deduction if you can.

The institution that manages your account should report all contributions made to the account during the year on Form 5498. You may also be able to find the information on your year-end statement.

Vehicle expenses

If you use your personal vehicle for work-related purposes, you can deduct the cost of gas, repairs, and depreciation. However, there's a simpler way to do this than collecting receipts and calculating all those costs individually: using the standard mileage rate.

The standard mileage rate is a set amount per mile that you can deduct for business use of your vehicle. In 2022, that rate is 58.5 cents per mile for January through June and 62.5 cents per mile for July through December.

There are a few things to keep in mind when using the standard mileage rate:

  • If you also use the vehicle for personal reasons, you can only claim tax deductions for the portion of miles driven for business purposes.
  • You must keep records of how many miles you drove for business purposes during the tax year

People often miss expenses like these come tax time because they think they need receipts—but now that you know better, hopefully, you won't miss them anymore!

Cell phone expenses

Business owners who use a cell phone for business purposes can deduct a portion of the cost of their service plan.

To calculate your deduction, multiply the cost of your monthly service plan by the percentage you use for business —somewhere between 30% to 50% is typical.

Do IRS rules vary by business type/entity?

The rules for income tax write-offs vary by business type or entity.

For example, self-employed taxpayers can deduct their health insurance premiums. However, businesses structured as S corporations can deduct these premiums on the business tax return, while owners of other pass-through businesses deduct these expenses on Schedule 1, which gets filed with their Form 1040.

Additionally, owners of S corporations can't take the home office deduction. If you have a home office you use for business, you can have the company pay you rent for the home office, but those rent payments are taxable income on your individual tax return.

You also have the option of reimbursing yourself for the cost of maintaining your home office under an "accountable" plan. However, this strategy requires a written plan documenting what expenses are allowable, completing monthly expense reports, and submitting receipts for any expenses you plan to reimburse.

If you want to create an accountable plan for your S corporation, it's a good idea to discuss the requirements with your CPA to ensure you're handling things correctly.

For deductions that do require receipts, can you use bank statements instead?

Bank and credit card statements can provide some documentation for tax credits and deductions, but they're usually not sufficient on their own. These statements don't show all the details that the IRS requires:

  • Payee
  • Amount paid
  • Date incurred
  • Description of the item or service showing the purchase was business-related

For example, your bank statement might show that you spent $135 at Costco on December 1. But an IRS auditor can't tell from the bank statement whether you purchased office supplies or groceries for home.

What other tax return documentation can you use if you don't have a receipt?

If you don't have receipts, keep as much alternative documentation as possible to support your tax deductions. Some examples include:

  • Canceled checks or bank statements
  • Credit card statements
  • Invoices
  • Bills
  • Account statements
  • Purchase and sales invoices
  • Contracts
  • Transaction histories
  • Duplicate records from vendors and suppliers
  • Calendars showing travel expenses, client meetings, and business meals
  • Cell phone records

The bottom line

Tax season doesn't have to be such a pain after all! By being aware of some common deductions that don't require receipts, you can ease some of the burden (and maybe even get a bigger tax refund in the process).

If handling your own bookkeeping gets too complicated, Accracy's expert bookkeepers and tax professionals are ready to step in.

 
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