Contractor with a ton of supply expenses. How detailed do I need to be when itemizing supplies expenses? Can everything be under one description? Ex: Materials & Tools

[Critter · Accepted solution]

On the tax return all you need to enter is a total amount.   IF  you are ever audited the IRS will want to see all of the reciepts 

[Carl]

Can everything be under one description? Ex: Materials & Tools.

I'm sure you mean materials and supplies. Tools are not classified as materials or as supplies. They are classified as either tools or equipment, depending on the specific "tool" item you are dealing with.

EX: a backhoe is a tool. But it's a piece of equipment used on a recurring basis to produce income. Therefore that would be classified as a business asset. WHereas a wrench is also a tool. That would be classified as a supply expense to the business, and not as a supply expense for any one specific job that the business performed.

Materials and supplies can be tied to a specific job and do not need to be itemized on the tax return. But if ever audited and required to prove how you got that amount, you'll need to provide receipts to prove it. Remember the three golden rules when dealing with the IRS:

1) You are *GUILTY* until proven innocent.

2) The burden of proof is on the accused (that's you!) and not the accuser.

3) If it's not in writing in black and white on a physical piece of paper, then it flat out did not occur.