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Itemized Deductions Schedule-A


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Old 09-11-2013, 07:01 PM
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Bank Statements for Audit

Sorry for the long question in advance. In 2012 I worked out of town for my company, and none of my expenses while out of town were reimburse, so when I did my taxes this year I place those expenses in as deductions. Now my problem is that, while out of town staying in a hotel, I mistakenly left my shopping bag of compiled receipts on the nightstand table instead of under the bed as I normally do when I'd leave my room, and upon my return to the room I discovered that my bag of receipts was missing. I confronted the cleaning lady about the issue, and she confessed to having thrown the bag away, thinking it was simply a bag of trash.

I went to go check the dumpster for the bag, but the trash truck had already come and emptied it. Well lucky for me, I make it a point to make ALL of my purchases with my debit card while out of town. So when tax time came around, I used my bank statements showing my expenses for the period in time in which I was working out of town to add up my deductible expenses.

Well, the IRS and Pennsylvania accepted my return and sent out my refunds with no problem, while my own state of Delaware put their's on hold, demanding that I show them proof of that I don't get reimbursed for my work expenses, as well as proof of my expenses shown on my tax return. I claimed gas, food/hygiene and hotel expenses on my taxes.

The information on my bank statements clearly shows the name of the location I made a purchase, the date, town, state, as well as the transaction number given to each purchase in which one could use to obtain an itemized log of what was purchased in each transaction shown (receipt). I highlighted all of my purchases I made at clearly labeled grocery stores, gas stations and hotels; all of which are well known, regional, national and international chains (Shell, HESS, Giant Foods, Super 8, Walmart and Rutters convenient store, which is like 7/11 in Western and Central PA).

So would my bank statements along with a copy of my work log showing the dates and locations I worked on my various projects over the years, be enough for the auditor to verify my out of town expenses I placed on my return?



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Old 09-11-2013, 10:05 PM
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Originally Posted by Fahim20 View Post
So would my bank statements along with a copy of my work log showing the dates and locations I worked on my various projects over the years, be enough for the auditor to verify my out of town expenses I placed on my return?
I guess needless to say, it is up to your state tax auditor's decision; in genral, you, as a Taxpayer, must be able to prove that you paid those expenses, as DE audited your tax returns and denied any deductions that do not appear legitimate.In my opinion,it’d be enough for the DE auditor to verify your out of town expenses you placed on your DE return; as you said,” The information on your bank statements clearly shows the name of the location you made a purchase, the date, town, state, as well as the transaction number given to each purchase in which one could use to obtain an itemized log of what was purchased in each transaction shown (receipt). And you also highlighted all of your purchases you made at clearly labeled grocery stores, gas stations and hotels”, AND the IRS/PA audited your tax return, you were able to prove that deductions were legitimate. UNLESS you had proper proof, the IRS /PA auditors must have concluded the deductions were not legitimate and removed them from your return. However,like the IRS, DE needs written documentation of purchases you made if you claim them as deductions on your DE tax return. Since you didn’t have your receipts for all business purchases, a bank statement or credit card statement showing the purchase and name of the merchant may help satisfy the auditor's need for proof. However, asyou can see, it is common sense to say that always show your receipts if you can because they list exactly what you purchased.



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Old 09-12-2013, 11:15 PM
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Originally Posted by Wnhough View Post
I guess needless to say, it is up to your state tax auditor's decision; in genral, you, as a Taxpayer, must be able to prove that you paid those expenses, as DE audited your tax returns and denied any deductions that do not appear legitimate.In my opinion,it’d be enough for the DE auditor to verify your out of town expenses you placed on your DE return; as you said,” The information on your bank statements clearly shows the name of the location you made a purchase, the date, town, state, as well as the transaction number given to each purchase in which one could use to obtain an itemized log of what was purchased in each transaction shown (receipt). And you also highlighted all of your purchases you made at clearly labeled grocery stores, gas stations and hotels”, AND the IRS/PA audited your tax return, you were able to prove that deductions were legitimate. UNLESS you had proper proof, the IRS /PA auditors must have concluded the deductions were not legitimate and removed them from your return. However,like the IRS, DE needs written documentation of purchases you made if you claim them as deductions on your DE tax return. Since you didn’t have your receipts for all business purchases, a bank statement or credit card statement showing the purchase and name of the merchant may help satisfy the auditor's need for proof. However, asyou can see, it is common sense to say that always show your receipts if you can because they list exactly what you purchased.
Thanks for the response. Now just to clear one thing up. My return wasn't audited by the IRS or PA, only DE. Hope you're correct in your assumption that they'll be fine with the bank statements. I mean, one cant buy much of anything else but gas and food at a gas station. And one cant buy much more than food, cleaning supplies and personal hygiene stuff at a grocery store. All of such stuff is deductible, and all purchases at the gas stations where between $20-$25, and the grocery store expenses were all only in the range of $30 - $75. So obviously I wasn't out splurging. Humm, we'll see how it goes, I guess. Thanks



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Old 09-15-2013, 11:06 PM
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Originally Posted by Fahim20 View Post
Thanks for the response. Now just to clear one thing up. My return wasn't audited by the IRS or PA, only DE. Hope you're correct in your assumption that they'll be fine with the bank statements. I mean, one cant buy much of anything else but gas and food at a gas station. And one cant buy much more than food, cleaning supplies and personal hygiene stuff at a grocery store. All of such stuff is deductible, and all purchases at the gas stations where between $20-$25, and the grocery store expenses were all only in the range of $30 - $75. So obviously I wasn't out splurging. Humm, we'll see how it goes, I guess. Thanks
You should also get a written statement from your employer stating that you have not been reimbursed for your expenses, and if possible have them provide a list of the locations and dates they have sent you to work. This Information, along with the bank statements will play a major role to prove that those expenses were incurred while you were on a business trip.

Most auditors are sympathetic to your case when you are able to show them that the expenses you have deducted were not "personal"

Also check out per die, rates etc. to see if you're way over set amounts.

Good luck!



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