What documents are needed to substantiate cash income during an IRS audit?

Good on you for wanting to properly document your income! The IRS generally looks for a consistent system of record-keeping rather than specific required documents. Your handwritten notebook is actually a start, but you'll want to strengthen your documentation. For cash income, the best practice is to maintain a combination of records: 1) A log/ledger of all transactions (your notebook works, but consider a digital spreadsheet), 2) Receipts or invoices provided to customers (keep copies), 3) Bank deposit slips and statements showing the deposits match your records, and 4) Any contracts or service agreements with clients. The handwritten notes aren't "bad" in themselves, but they're weaker evidence since you could theoretically write them all at once. Adding supporting evidence like bank deposits that align with your notes makes your case much stronger. Even simple invoices (can be done with free templates online) given to customers with their names will significantly improve your documentation.

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From my experience doing taxes for small businesses, it's not just WHAT records you keep but HOW CONSISTENT you are with them. The IRS looks for patterns. If you suddenly have a bunch of cash deposits without corresponding income records, that's a red flag. If your notebook shows steady income but your lifestyle/spending suggests much higher income, that's a red flag.

Has anyone here actually been audited for cash income? What did they specifically ask for? I'm a bartender and get a lot of cash tips that I report honestly, but I don't have any real "proof" besides my bank deposits.

For cash income documentation during an audit, the IRS typically accepts what they call "contemporaneous records" - meaning records made at or near the time of the transaction. Your notebook approach is actually on the right track, but you'll want to enhance it. Key documents that strengthen your case: 1) Daily cash receipts log (your notebook counts, but make entries consistent and detailed), 2) Bank deposit records that correlate with your logged income, 3) Any receipts or invoices you provide to customers, 4) Photos of completed work or service agreements, and 5) Calendar or appointment book showing scheduled jobs. The IRS understands that cash businesses often have less formal documentation, but they look for consistency between your reported income, lifestyle, bank deposits, and spending patterns. Your bank statements showing regular deposits that match your notebook entries will be very helpful. Consider also taking photos of completed work and keeping simple service agreements or at least text messages with clients about job details - these all help corroborate your income claims. The key is showing a reasonable, consistent system rather than perfect documentation.