Auto, Travel, Meal and Entertainment
IRS requires you to keep a “contemporaneous record” of these expenses. You should record the elements of an expense or of a business use at or near the time of the expense or use and support it with receipts.
If you maintain a log on a weekly basis that accounts for use during the week, the log is considered a contemporaneous record. Sample forms are found below. You are invited to print these forms and keep them with you in a handy location. If you travel by car, it’s a good idea to keep your log near the driver’s seat and record items as you go. You can keep a formal record like this or you can simply record these same tems in a calendar (either paper or computerized) that you already keep.
You do not always have to record the name of each recipient of a gift. A general listing will be enough if it is evident that you are not trying to avoid the $25 annual limit on the amount you can deduct for gifts to any one person. For example, if you buy a large number of items or tickets to an event and give one or two items or tickets to each of many customers, it is usually enough to record a general description of the recipients, such as “clients” or “customers”.
The format is less important—Most important is consistency: remember to record these items regularly and stick with it throughout the year! You’ll be glad at tax time when you need to have totals, and most certainly glad in the event you are audited!