Record Keeping

Good recordkeeping imperative. Lack of organization at tax time or in the presence of an auditor is a loosing proposition. For traveling professionals, it is best to get a file storage product that is portable and accessible. The following is a rough outline of how I organized my receipts and documents when I traveled. Items that are HIGHLIGHTED should have their own folder. You should also keep a different folder for EACH assignment. This "Assignment Folder" should be used to keep expenses associated with that assignment only.

For Starters

Maintain 2 logs

Vehicle Mileage Log - Keep one in each car that you own and a rental car that you use for an extended period on assignments. On December 31 in the evening, record the odometer reading on the old book and the new book. This will establish the TOTAL mileage put on the vehicle for the entire year. In between, record all business trips either using the trip odometer ort the beginning and ending odometer reading. Multiple trips of the same length (e.g. going to work) can be recorded in blocks using the number of days at work.

Travel Expenses Log

This records all other expenses and keeps a dairy of your travels. More than receipts can be put here. All expenses under 25$ do not require a receipt. This log is the best place to record the event.

In logs, it is important to record Time, Place and Purpose (When, Where and Why). Mileage may have a charitable, medical or business purpose

Employee Business Expenses

This is the largest item. With each assignment, you should keep receipts or make log entries for the following:

Assignment Related

1) Travel TO the assignment. Include Keep all receipts/logs that contain mileage, lodging, tolls, parking, air or travel fares. The logs should record this.

2) Travel between your assignment and home. Trips home during an assignment or between extensions are deductible, but can be limited. The logs should record this.

3) Transportation from temporary residence to temporary worksite. Since you are in "travel status", this is not commuting, it is business mileage. The logs should record this.

4) Start up fees for landline phones, utilities.

5) It is NOT necessary to keep a record of meal or food expense as the IRS assigns a "per diem" rate for each location, but keep a copy of your work contract.

6) Vehicle expense receipts are not required when using the standard mileage rate. 99% of travelers should use this method.

GENERAL BUSINESS EXPENSE

1) Uniforms, licenses, dues, seminar expenses and any other job related costs.  

2) Routine communications expense (internet/phone). With multiple phone and internet accounts, it is difficult to itemize phone expenses. The first phone is not a deductible expense. Any services and business related long distance on the first phone line may be deductible. Additional communications expenses are deductible to the extent of business usage (cell phone, pager, internet etc). If your cell phone is your only phone, then keep a record of your annual expenses.

To determine the percent of the time you use the phone for business. Looking at a few monthly statements and determine the percentage of minutes that you use the phone for business.

3) Expenses related to upkeep of home while away on assignment that you would otherwise not pay for (E.g. Lawn maintenance, mailing fees)

4) Other job related expenses including but not limited to: Printing fees for resumes, postage and money transfer fees.

Common to all Taxpayers

INCOME:

1) Most income is reported on W-2's and 1099's (Miscellaneous Income). .

2) All states that you received refunds from will send you a "1099G".

3) Retirement distributions (1099 R)

4) Any other income that is reported to you - Social Security, Workers Compensation, Interest, Dividends etc

CAPITAL GAINS/LOSSES

If you bought or sold stocks, bonds etc for a gain or loss, you will receive a year end statement of the proceeds from the sales. You will also need to know the purchase price. Most firms will supply that too, but make sure that the statement has it listed..

EDUCATIONAL TUITION OR INTEREST PAYMENTS

MEDICAL DEDUCTIONS

Keep you receipts for out of pocket medical expenses, even if you do not itemize. Some states allow you to deduct your medical expenses even if you do not itemize on your federal return.

TAXES YOU PAID

This category includes the following:

1) Taxes paid on vehicles, boats or any other personal property that is based on VALUE. Many automobile registration fees have a tax as a part of their total.

2) Real estate taxes paid on real property (house, mobile home etc)

3) All state and local income taxes paid during the year. These include:

        State income taxes paid during the year with a return for previous years or ones that are reassessed.

        Estimated tax payments

        Tax payments to foreign countries

4) Sales tax receipts on major purchases over 500$

INTEREST

Any interest expense for mortgages, home equity loans or other deductible interest. You will usually receive a statement for these amounts at year end.

CHARITY

1) Keep all receipts for charitable contributions. Occasional cleaning of the closet usually results in a trip to a Goodwill or Salvation Army drop box. In this case, itemize your merchandise noting EACH item and the quantity of each item. Assign a REASONABLE fair market value to these items. Make sure you get a receipt from the institution. Most organizations will supply a valuation sheet to determine average price of an item.

2) Large items like cars etc will require a statement from the charity or a certified appraisal.

CASUALTY LOSSES

Any losses not covered fully by insurance may be deductible. Keep records of this in one folder per event.

MISCELLANEOUS DEDUCTIONS:

Tax preparation fees, Investment fees etc

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