How to File Taxes on the Cash Spent Out

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When claiming cash purchases on a tax return, be sure to include detailed receipts that illustrate what was purchased and how it was paid for. Deduct even cash transactions with help from an enrolled agent in this free video on filing taxes.

Part of the Video Series: Filing Taxes
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Video Transcript

My name is Penny Tokash. I'm an Enrolled Agent; my company is Tax Facts Incorporated located in Jonesboro, Georgia. I'd like to talk to you about how you claim the cash that you spent during the tax year. If you are a self-employed person and you spent money in cash for certain items you can still write it off on your taxes. They will; the IRS will be requiring proof however. So make sure you keep the receipt for the cash that you spent and write very clearly on the receipt what the money was spent for. Then along with checks and credit card payments, you'll divide those cash receipts into their categories, add them all up and they will go into your trial balance according to the category that they are. Most common is going to be money that you spent for food, for entertainment or money that you spent for gas for your car. Those are the most common types. But sometimes you'll be out without a credit card and without your checkbook and you'll need to spend cash for whatever; just keep the receipt and make sure it's mark clearly what that is for.

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