IRS Recordkeeping Requirements for Business Receipts, Explained

The IRS does not maintain one master list of documents every business must save. Its general instruction is that supporting documents show the income, deduction, or credit claimed and that they be kept in an orderly way, by year and type of income or expense. For income, that typically means cash register tapes, bank deposit slips, receipt books, invoices, and credit card charge slips. For expenses, it typically means canceled checks, account statements, credit card sales slips, invoices, and receipts.

In practice this means a receipt is rarely the only acceptable proof, but it is usually the most direct one. A bank or card statement shows that money moved; a receipt or invoice shows what was purchased and from whom. Keeping both, tied together, is what actually survives a review.

Section 274(d) of the tax code sets a higher bar for four categories: travel expenses, business meals, gifts, and listed property, which includes passenger vehicles. For these, the law requires substantiation of the amount, the time and place (or date, for a gift), the business purpose, and the business relationship of anyone involved, backed by adequate records or other evidence that corroborates your own statement. This is also where the commonly cited rule that documentary evidence is not required for expenses under $75 lives, with lodging as a standing exception that always needs a receipt regardless of the amount.

Outside of these four categories, the IRS still expects records that support what you claimed, but there is no equivalent statutory dollar threshold. Treat the $75 rule as narrow, not as a general license to skip receipts for other kinds of purchases.

The IRS's baseline instruction is to keep records for 3 years from the date you filed the return, or 2 years from the date you paid the tax, whichever is later. That period grows to 6 years if you omit more than 25% of the gross income shown on your return, and to 7 years if you are claiming a loss from worthless securities or a bad debt deduction. If you do not file a return at all, or file a fraudulent one, there is no time limit: keep those records indefinitely.

Records tied to property, such as equipment you depreciate or a vehicle you use for business, should be kept until the statute of limitations expires for the year you dispose of that property, since you will need them to figure any gain, loss, or remaining basis.

The same requirements that apply to paper records apply to electronic ones. An electronic storage system needs to index, store, preserve, retrieve, and reproduce your records in a legible format, and it needs to produce a complete and accurate copy that would be accessible if the IRS asked for it. A blurry, cropped, or partial photo does not meet that bar even if the file itself is saved correctly; the image has to actually show what a paper receipt would show.

This is why a receipt app's job is not finished at the photo. Keeping the original alongside the extracted data, and being able to reproduce a complete, readable copy years later, is the part of the requirement that is easy to overlook.