Can I deduct 1099misc expenses incurred but not documented?

[MichaelDC · Accepted solution]

The bottom line, the responsibility is on you to keep good records in order to prove, or substantiate, your expense as valid. It may be good to view this as a learning opportunity and remember the value of good documentation.

You should make an earnest effort in accurately reporting your expenses. It should be written. Many things are available online now. This can be from credit card receipts, checkbook registers, logs, anything to show that you made an earnest effort to be accurate with some substantiation.

If your records were lost due to circumstances beyond your control, such as by fire, you have a right to reconstruct your records as completely as reasonably expected. But if you were able to get duplicate records and did not, the courts will not allow estimation of business expenses here.

If there is no documentation, outside testimony can also be used as substantiation, but the IRS will review additional factors, such as the credibility of the witnesses and the amount and quality of the evidence.

Written evidence could be a log book for mileage or daily record that would include details about how, when and where an expense was incurred for business purposes.