Under most circumstances, the IRS can audit any tax return within the past three years. The time frame extends to six years for atypical cases of suspected tax fraud. Individuals are required to keep documentation for expenses and deductions claimed. The IRS refers to this as the "burden of proof". In some cases, you may no longer have the receipts on file for the return being audited. There are still ways to validate claimed expenses and survive an audit.
Gather all the documentation and receipts you do have. Sort through any paperwork or files where old receipts might be stored. Once you find all the receipts and other documentation you do have on hand, label and file them by expense. Even if you don't have receipts for every expense, having some receipts on hand lends more credibility to your case. Review paperwork and files on hand to potentially recover any lost or misplaced receipts.
You may be able to contact vendors for copies of receipts. Pharmacies, for example, can often print out a list of prescriptions purchased throughout the calendar year. Hospitals and doctor's offices also keep detailed records of receipts. Some information may be stored online in an email or by logging into a vendor's website. Examine bank statements and credit card bills for any items that can back up or explain deductions on your return.
If no receipts or records of purchase turn up, there are alternate methods. The IRS sometimes allows a "statement" or affidavit from the taxpayer. The letter includes a statement from the taxpayer explaining the situation and lack of receipts. A notary signs and stamps the letter. The IRS has the option to accept a written or oral statement as sufficient proof of a claim. Providing printed bank statements or credit card statements can help prove your case. Canceled checks or even a copy of an invoice can also serve as proof of an expense. If all else fails and you don't pass the audit, you do have the option to appeal the IRS auditor's decision.
Check to see if you really need a receipt. Some expenses, such as charitable deductions, don't require a receipt if the deduction is less than $250. At the time of the audit, it's best to approach any missing documentation as professionally as possible with the auditor. If the deduction concerns a large asset or deduction, consult with a tax attorney.
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