An Ounce of Prevention

Ounce of Prevention

I was at an IRS Appeals hearing the other day and the Appeals Officer made an interesting comment to me.   He said “You know, we disallow more deductions because the person could not provide substantiation for the deduction than we do because they could not establish a business purpose.”

That got me to thinking that most people spend more time and energy wondering what they can deduct instead of documenting what expenses they do have.

We understand that you may not know all the things you can deduct.  The tax law is complicated and it changes every day.  Even a “Tax Expert” learns new things as the law changes or is reinterpreted.

So if you are unsure as to whether or not you can deduct something, go ahead and keep the receipt and record it.  If you later find out that you could have deducted that expense, then you may not be able to because you don’t have the records.

On the other hand, if you find out later that you cannot deduct that expense, there is not harm done.   Just remove the receipt or reclassify the expense as a personal expense.

As Ben Franklin once said  “An ounce of prevention is worth a pound of cure.”

 

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