IRS Rules for Recording Business Expenses: Travel, Transportation, Meals and Entertainment

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A clear guide of IRS rules for recording business expenses for self employed, business ownders, or employees.

Read this article to learn about business expense write-offs and how to keep an IRS compliant record of business expenses write-offs.

Background on Adequate Recordkeeping

It is important for businesses to follow IRS guidelines of recordkeeping of business expenses. Further, adequate recordkeeping per the IRS guidelines helps prevent an audit. It also prepares you in the event of an audit.

Overall, IRS-compliant recordkeeping is good for keeping Uncle Sam happy and off your back. A great solution for adequate recordkeeping is Falcon Expenses, a top-rated expense tracker and mileage tracker app.

Detailed in this article are the IRS rules for recording business expenses.

What is does the IRS require for adequate records of expenses?

A business needs to keep a log of business expenses along with documentary evidence (i.e. such as receipts) of each individual expense. This is required for IRS compliant adequate record-keeping. However, there are a few exceptions.

Expenses under $75 that are not lodging expenses do not require a paper receipt. Further, each expense record is typically adequate if it contains the amount, date, place, and essential character of the expense.

There are a few major expense types that the IRS has specified recordkeeping requirements: meals, entertainment, travel, transportation, and gifts.

Check out Falcon Expenses fully mobile expense tracker app to meet the IRS requirements for adequate recordkeeping. With Falcon Expenses capture receipts, enter cash expenses, track mileage expenses, and log billable hours.

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Learn how Falcon Expenses helps you, whether you’re the employer, employee, or self-employed, track business expenses. Falcon Expenses is a fully mobile expense tracker app. With Falcon Expenses, scan receipts, enter cash expenses, track mileage expenses and log billable hours.

Meals

A restaurant receipt (for meals over $75 dollars) is typically enough, as long as it contains the following:

  • Date and amount of expense.
  • Name and location of restaurant.
  • The number of people served.
  • Business Purpose: details the business benefit, or expected benefit to be gained.
  • Relationship: the name, titles or other designations about the recipients is detailed in the record that shows the business relationship to the recordkeeper.

Check out Falcon Expenses. Falcon makes it easy to meet these requirements with a fully mobile expense tracker and receipt keeper so you never lose a paper receipt again. Quickly create IRS-compliant expense reports and email them to anyone from your phone.

Download Falcon Expenses
Falcon Expenses is free to download. If you’re on a desktop it’s best to use your iPhone and search for Falcon Expenses on the app store.

Transportation

Many business expenses involve transportation.
Such as driving your personal car to and from a client’s office. Taking a train or a plane to a new city for a business meeting or conference. With that said, transportation expenses include vehicles, taxis, buses, rail, air, etc.

The IRS specifies the following as requirements for adequate recordkeeping of transportation expenses:

  • Date and amount of each expense.
  • Vehicle expenses include the cost of the car. This includes any improvements and mileage logs for each business use (including total miles for the year).

    For information about vehicle expenses review this article: How to Maximize Business Use Car Tax Deductions. This post compares the actual car expense method vs the standard mileage rate expense method.

For details on what qualifies as tax-deductible business transportation expenses check out this article, What Qualifies as Tax Deductible Business Transportation Expenses.

Download Falcon Expenses
Falcon makes your life easy by making it easy and seamless to meet these requirements with a fully mobile expense capture and expense reporting app. Falcon Expenses is free to download. If you’re on a desktop it’s best to use your iPhone and search for Falcon Expenses on the app store.

Entertainment

Entertainment expenses are expenses associated with the entertainment of clients, partners, vendors, etc. For example, entertainment expenses include dinners, drinks, and sporting events. Also, entertainment expenses can include incidentals such as taxis, meals, and telephones. Recordkeeping requirements for many of these expense types are already described in this post.

However, the IRS also requires that the following records be kept for entertainment expenses:

  • Date and amount of each separate expense.
  • Name and address/location.
  • Type of entertainment, if not otherwise apparent.
  • Business Purpose: details the business benefit, or expected benefit to be gained.
  • Relationship: the name, titles or other designations about the recipients is detailed in the record that shows the business relationship to the recordkeeper.

Download Falcon Expenses
Falcon makes your life easy by making it easy and seamless to meet these requirements with a fully mobile expense capture and expense reporting app. Falcon Expenses is free to download. If you’re on a desktop it’s best to use your iPhone and search for Falcon Expenses on the app store.

Travel

Travel expenses include expenses employees or independent contractors incur while traveling for business purposes. For example, these expenses include travel, lodging, meals, entertainment, etc. The recordkeeping requirements for many of these expense types are already described in this article.

The IRS also requires the following records be kept for entertainment expenses:

  • Date and amount of each separate expense.
  • Dates left and returned for each trip and the number of days spent on business.
  • Destination or area of travel (name of city, town)
  • Lodging: Name and location of the hotel, separate (itemized) amounts for charges such as lodging, meals, and telephone calls.
  • Business Purpose: details the business benefit, or expected benefit to be gained.

Download Falcon Expenses
Falcon makes your life easy by making it easy and seamless to meet these requirements with a fully mobile expense capture and expense reporting app. Falcon Expenses is free to download. If you’re on a desktop it’s best to use your iPhone and search for Falcon Expenses on the app store.

Gifts

Often during the holidays, businesses give clients and others gifts.

The IRS specifies the following as adequate recordkeeping requirements for gifts:

  • Date and amount of the gift.
  • Description of the gift.

Download Falcon Expenses
Falcon makes your life easy by making it easy and seamless to meet these requirements with a fully mobile expense capture and expense reporting app. Falcon Expenses is free to download. If you’re on a desktop it’s best to use your iPhone and search for Falcon Expenses on the app store.

In the Event of Incomplete Records

In cases where complete records of the expense are not available, the information of the expense that is not available must be proven with:

  • The written or oral statement, from the individual incurring the expense, containing specific information about the information that was not available.
  • Other supporting evidence that is sufficient to establish the information that is missing.

Source: IRS Publication 463, Ch 5, Recordkeeping

Download Falcon Expenses
Falcon makes your life easy by making it easy and seamless to meet these requirements with a fully mobile expense capture and expense reporting app. Falcon Expenses is free to download. If you’re on a desktop it’s best to use your iPhone and search for Falcon Expenses on the app store.

About Falcon Expenses

Falcon Expenses is a top-rated mobile application for self-employed and small businesses to track expenses and tax deductions. Falcon customers record $6,600, on average, in annual tax deductions. Get started today. The longer you wait, the more tax deductions you miss out on.

Automatically track mileage expenses and expenses, keep an odometer log, receipt vault and log billable hours. Quickly organize expenses by time period, project, or client. Easily prepare reports for email to anyone in PDF or spreadsheet formats, all from your phone. Use for keeping track of tax deductions, reimbursements, taxes, record keeping, and more. Falcon Expenses is great for self-employed, couriers, freelancers, realtors, delivery drivers, business travelers, truckers, and more.

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