Do You Need Proof of Tax Deductions?

The Internal Revenue Service allows taxpayers to deduct certain expenses from their taxes each year, such as business expenses and medical expenses. However, taxpayers must be able to prove that they paid these expenses, as the IRS may audit their tax returns and deny any deductions that do not appear legitimate.


If the IRS audits your tax return, you must be able to prove that deductions are legitimate. If you do not have proof, the IRS auditor will conclude the deductions were not legitimate and remove them from your return. If you then owe tax on your return, you must pay it as well as penalties for late payment and underpayment of tax.

Types of Proof

The IRS needs written documentation of purchases you made if you claim them as deductions on your tax return. If you save your receipts for all business purchases, you can easily show them to the IRS in the event that you get audited. If you do not have a receipt for a purchase, a bank statement or credit card statement showing the purchase and name of the merchant may help satisfy the IRS auditor's need for proof. However, always show your receipts if you can because they list exactly what you purchased.

Understand Deduction Laws

Never take a deduction unless you are sure that it is legal to do so. Some taxpayers mistakenly take deductions that they are not entitled to; if they get audited, the IRS will conclude that they are not qualified for the deduction and remove it, even if the person has proof that they purchased an item. Consult a tax professional if you are unclear on how a particular deduction works.

Cancelled Checks

The IRS accepts cancelled checks as proof of deductions. However, as of 2010 many banks in New York City no longer issue cancelled checks to customers. The IRS therefore accepts images of checks on bank statements as a substitute for cancelled checks. You can use your bank statement as long as it lists the check number, the payee's name and the amount of the check.