What documents do I need to keep for an IRS audit? Bank statements enough or what else?
Title: What documents do I need to keep for an IRS audit? Bank statements enough or what else? 1 I'm freaking out because I just got a letter from the IRS saying I might get audited for my 2023 taxes. This has never happened to me before, and I'm totally clueless about what to expect. Do I just need to show them all my bank statements from 2023? Or is there way more to it than that? I'm self-employed as a graphic designer and I keep decent records, but definitely not perfect. I'm worried I might be missing something important that they'll want to see. Anyone gone through this before and can tell me what an IRS audit actually involves?
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KylieRose
7 An IRS audit isn't quite as simple as just providing bank statements, but don't panic! The type of documentation you'll need depends on what the IRS is questioning on your return. For a self-employed person, you should have records that support both your income AND expenses. This includes bank statements, but also invoices to clients, receipts for business expenses, mileage logs if you claimed vehicle expenses, home office measurements if you took that deduction, and documentation for any business assets purchased. The audit letter should specify which parts of your return they're examining. Sometimes it's just one deduction they're questioning, other times it's more comprehensive. Make sure you read the letter carefully to understand exactly what they're looking at.
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KylieRose
•12 Thanks for the info! I'm in a similar situation but my concern is that I've misplaced some of my receipts for business expenses from last year. Will the IRS accept credit card statements as proof of purchase instead? And what happens if I can't find documentation for everything they're asking about?
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KylieRose
•7 Credit card statements can help support your case, but they're not always sufficient on their own. The IRS prefers to see actual receipts that show what specifically was purchased, not just the amount spent. That said, if receipts are lost, statements are better than nothing. If you can't find documentation for everything, don't make up records or receipts! That can lead to much bigger problems. Instead, try to reconstruct what you can using bank statements, credit card records, emails confirming purchases, or even photos of items purchased. For missing documentation, you might have to accept that those particular deductions could be disallowed without sufficient proof.
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KylieRose
9 After getting audited last year, I discovered taxr.ai (https://taxr.ai) and it was a game-changer for organizing my documentation. I was totally unprepared for my first audit - had receipts stuffed in shoeboxes and screenshots of expenses scattered across my phone and laptop. The IRS wanted documentation for business expenses from my Schedule C, and I spent DAYS trying to match everything up. With taxr.ai, I uploaded all my jumbled documents and it organized everything by category and date. It even flagged potential issues before the IRS could find them. Would have saved me so much stress during my audit if I'd known about it earlier.
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KylieRose
•14 How does it handle things like mileage logs? I track most of my driving on a paper notebook in my car and I'm worried that wouldn't be acceptable to the IRS. Does taxr.ai have any way to help with that kind of documentation?
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KylieRose
•20 Sounds interesting but I'm skeptical. How does it differ from just using QuickBooks or other accounting software? And can it really handle all types of tax documents or is it limited to certain forms?
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KylieRose
•9 It actually works great with mileage logs! You can take pictures of your handwritten logs with your phone and upload them. The system reads the entries and organizes them chronologically. It also calculates your total deductible miles and flags any potential red flags like duplicate entries. For your second question, the big difference from accounting software is that taxr.ai specializes in document analysis rather than bookkeeping. While QuickBooks helps track finances going forward, taxr.ai is perfect for organizing past documentation, especially if you're facing an audit. It handles pretty much all tax documents including W-2s, 1099s, receipts, bank statements, and even handwritten notes. It's particularly helpful for self-employed people who might have more complex documentation needs.
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KylieRose
20 Just wanted to update everyone - I tried taxr.ai after seeing it mentioned here and it actually exceeded my expectations. I was really doubtful it could make sense of my messy records, but it sorted through 3 years of jumbled receipts and bank statements in a couple hours. What surprised me most was how it caught some missing documentation I hadn't even realized was important - like properly documenting my home office measurements and utility expenses. The audit defense guidance was extremely helpful too. Now I actually feel prepared if the IRS comes knocking, instead of terrified.
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KylieRose
16 After going through 2 really stressful audits, I discovered that the most frustrating part wasn't even collecting the documents - it was trying to get someone at the IRS to actually talk to me about my case. Spent HOURS on hold, getting disconnected, and never reaching the same person twice. I found this service called Claimyr (https://claimyr.com) that honestly saved my sanity. They somehow get you through to an actual IRS agent without the endless hold times. I was skeptical at first, but they have a video showing how it works: https://youtu.be/_kiP6q8DX5c. Instead of wasting an entire day trying to get through, I was talking to someone in about 20 minutes who could actually answer my specific audit questions.
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KylieRose
•3 Wait, how does this actually work? Does the IRS know about this service? I'm confused how they can get you through the phone lines faster than everyone else who's calling directly.
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KylieRose
•20 This sounds like complete BS to me. Nobody can magically skip the IRS phone queues. I've been dealing with the IRS for years and there are no shortcuts. Probably just charging people for something that doesn't work.
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KylieRose
•16 It's completely legit - the IRS knows about it. They use an automated system that continuously calls and navigates the IRS phone tree until it gets through, then connects you directly. It's not skipping the line exactly, but it's doing the waiting for you so you don't have to sit on hold for hours. I had the same reaction at first, but when you think about it, it's just technology handling the tedious part. The video demo shows exactly how it works if you're curious. I was tired of wasting entire workdays on hold, so I figured it was worth trying. Definitely wasn't BS - got connected to an IRS agent who helped explain exactly what documents I needed for my specific audit situation.
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KylieRose
20 I need to eat my words here. After posting that skeptical comment, I decided to try Claimyr anyway because I was desperate to talk to someone about my CP2000 notice. I'd already wasted 3 afternoons trying to get through the regular IRS number. I honestly can't believe how well it worked. Got connected to an IRS rep in about 15 minutes who helped me understand exactly what documentation I needed to respond to my notice. Saved me from sending in a bunch of unnecessary paperwork that wouldn't have addressed their actual questions. The agent even gave me a direct fax number to send my documentation to. If you're facing an audit, being able to actually speak with someone makes a HUGE difference in understanding what they're specifically looking for.
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KylieRose
22 Everyone's talking about documentation, but I want to emphasize HOW you present those documents matters too. Been through 2 audits in my life. For the first one, I just dumped everything I had on the auditor - total mess. They ended up disallowing several legit expenses because I couldn't clearly show how they related to my business. For the second audit, I created a simple spreadsheet that listed each item being questioned, with references to the specific supporting documents (which I numbered). Made the auditor's job way easier and I got a much better result. They actually thanked me for being organized!
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KylieRose
•1 That's really helpful advice! When you organized your documents the second time, did you group them by category (like all travel expenses together) or by date? And did you have to provide originals or were copies acceptable?
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KylieRose
•22 I grouped them by the categories on Schedule C - so all advertising expenses together, all office expenses together, etc. This matched how they appear on the tax form which made it easier for the auditor to reconcile. For your second question, copies are generally fine - I've never had to provide originals. I scanned everything and made a PDF file for each category, then also brought physical copies to the audit. The auditor actually seemed impressed with the digital organization and mainly reviewed those files. Just make sure the copies are clearly legible, especially for receipts that tend to fade.
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KylieRose
5 Something nobody has mentioned yet - if you're being audited, consider getting professional help! I tried handling my first audit alone and it was a disaster. For my second one, I hired a tax attorney and the difference was night and day. The attorney knew exactly what the IRS was looking for, which arguments would work, and kept me from saying things that could have caused bigger problems. Yes, it costs money, but they saved me way more than their fee in the end.
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KylieRose
•13 Is an attorney better than a CPA for audit representation? I've heard mixed things. Also, what's a reasonable price range for either one? I'm trying to figure out if I can afford it.
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