(This is known as the Cohan Rule based on a tax court case that may give you flexibility with your records when proving expenses to the IRS.) Items you probably can’t recreate The IRS provides some flexibility and can take your word that you had allowable expenses. If you’re a business that deducted expenses and you no longer have receipts, it may be logical that you would have expenses that the IRS should allow even though you don’t have a receipt.

Your bank statements and cancelled checks are a good starting point, if you still have access to these documents. It may be smarter to hire a professional to sort out the details and work directly with the IRS.īut what happens if you don’t have all the information to prove items on your return?įor example, if you deducted medical expenses and no longer have receipts or even the list of medical providers, prescriptions, and other medical costs – what should you do? Well, you could retrace your steps. Determine your medical expenses for the year and get receipts from doctors and pharmacies.

If you are faced with proving items reported on your tax return, you may find it difficult or impossible to find proof for every item the IRS is questioning. Each year, there are about 6 million taxpayers who have their tax return questioned by the IRS, either by audit or by a verification notice from the IRS.