You're preparing your 2010 taxes when you realize that you don't have receipts for a number of items you bought on Craigslist and at yard sales. Now what?
This is a common concern for family child care providers who often buy such items with cash. But don't give up!
IRS rules say that you must keep adequate records to support the business expenses you claim on your tax return. See IRS Publication 583 Starting a Business and Keeping Records. Ideally, you want a receipt for your purchases, but it's not a requirement.
Here's what you can do when buying items on Craigslist or at yard sales:
* Bring along a receipt book or write down the following information on a piece of paper. It might say: "February 17, 2011 - Used crib - $15 - 1436 Smith Avenue - saw ad on Craigslist." Have the person you bought the item from sign it.
* Save a copy of the Craigslist or yard sale ad you saw in the newspaper or online.
* Take a picture of what you purchased.
If you didn't do any of these things take the following steps for items you bought in 2010. Write out a note describing the date, item purchased, cost, and place of purchase. Estimate the cost if you have to. Take a picture of the items now.
In the future if you forget to get a signed receipt from the person you bought the item from, try to write down a record of the transaction and take a picture as soon as you can afterwards. It's always a good idea to review your records at the end of each month to catch those transactions where you don't have a receipt.
Do you do something different to record your Craigslist and yard sale transactions?
See also my previous post: The Case of the Fading Receipt.
Image credit: landmarkchurchsalisbury.org
For more information, see my book Family Child Care Record Keeping Guide.
Copyright 2011, Tom Copeland, www.tomcopelandblog.com