Q&A: How can I write off my book purchases on my taxes?

QUESTION: When I purchase used books at garage sales, flea markets, Friends of the Library book sales, or estate sales, usually I don’t get a receipt. Even when I ask for a receipt, I can’t get one. Since I need to account for these expenses on my tax return next year, how can I prove to the Internal Revenue Service that I’ve actually paid for the books?

ANSWER: If you can write a check, do it. Then the cancelled check serves as your receipt. In cases where you can pay only cash, here is my suggestion: Keep a notebook listing the dates and locations of your purchases. That way, you could use this documentation to support another write off: deducting the business use of your car.

The thing I am not sure about is whether you’re allowed to deduct small cash expenses in cases where you don’t have a receipt. I have read conflicting things. Some people say you can deduct expenses less than $75 without a receipt, as long as you document the source, date, and type of merchandise. Other people say there is absolutely no deduction the IRS will allow without a receipt. I wish I knew the right answer for this one! But my hunch is, as long as the IRS sees some kind of paper trail — even if it’s just stuff you’ve written down — at least they’ll know you’re not making the thing up out of whole cloth.

Two things I’m sure you should avoid:

1. Two-martini lunches with fellow booksellers to discuss your bookselling exploits.

2. Taking tax advice from someone like me who isn’t a tax attorney.

Related posts:

1. Q&A: Do I owe taxes if I lose money selling books online?
2. Q&A: Is my inventory deductible on my tax return?