Do I need to keep all receipts or could I just use my bank statements for deductions?

While bank statements can provide a useful overview of your expenses, it's generally recommended to keep detailed records, including receipts, to substantiate your deductions. Here's why: 1. **Proof of Purchase:** - Receipts provide specific details about each transaction, such as the date, amount, and nature of the expense. This information is crucial for proving that an expense is legitimate and business-related. 2. **IRS Requirements:** - The IRS requires that you maintain adequate records to support your deductions. While bank statements show that a transaction occurred, they often lack the detail needed to verify the nature of the expense. 3. **Audit Protection:** - In the event of an audit, having receipts can help you substantiate your claims and avoid potential penalties. Receipts provide clear evidence that can be matched to your bank statements. 4. **Digital Records:** - You can keep digital copies of receipts, which are generally acceptable to the IRS. Scanning or photographing receipts and organizing them by category can make record-keeping more manageable. 5. **Expense Tracking:** - Detailed records help you accurately track and categorize expenses, ensuring you don't miss out on any potential deductions. In summary, while bank statements are helpful, it's best to keep receipts and other documentation to fully support your deductions. This practice not only helps with compliance but also provides peace of mind.

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