How to Record Expenses Without Receipts: The $75 Rule and Four Elements

If you’re missing receipts for business expenses, you can often still claim the deduction. Federal tax rules do not require a receipt for every business expense, and knowing how to record expenses without receipts comes down to two things: understanding when a receipt was never required, and knowing which secondary documents the IRS will accept when one is missing. For most non-lodging expenses under $75, a written log entry is enough on its own. For larger expenses, bank statements, calendar entries, mileage logs, per diem rates, and — in narrow circumstances — reasonable estimates can carry the deduction.

The $75 Rule and Why Records Still Matter

The IRS does not require documentary evidence, meaning a receipt, invoice, or paid bill, for any business expense under $75, as long as the expense is not for lodging. Lodging always requires a receipt, regardless of amount. Transportation charges like taxi fares and tolls also qualify for the under-$75 exception when a receipt is not readily available.¹

Falling under $75 does not mean no record at all. You still have to document the expense in writing, and federal law requires every taxpayer to keep records sufficient to establish the amounts reported on their return.² A daily log or expense-tracking app entry works fine. Without that entry, an auditor can disallow the deduction no matter how small the amount.

The Four Elements Every Expense Record Needs

Whether you have a receipt or not, the IRS expects proof of four core elements for each business expense: the amount, the date, the place or description, and the business purpose. For some categories, like gifts and travel, you also need the business relationship of the person involved.³

The specifics vary by category:

Travel: cost of each separate expense (transport, lodging, meals), departure and return dates, number of business days, destination, and reason for the trip.
Gifts: cost, date, description, business purpose, and the recipient’s business relationship. The deduction is capped at $25 per recipient per year.
Transportation and vehicle expenses: cost, date, destination, business purpose, and for a car, the mileage of each business trip plus total miles for the year.

A log you fill out at or near the time of the expense, rather than weeks later, carries the most weight in an audit. That is the record the rest of your documentation is meant to support.

Secondary Documentation That Replaces a Receipt

When a receipt is gone, the IRS lets you meet your burden of proof with other evidence supporting your own statement about the expense.⁴ The stronger and more varied the documentation, the more likely an auditor will accept the deduction. Useful substitutes include:

Bank and credit card statements showing the date, amount, and vendor. Because they are generated automatically at the time of payment, they carry more credibility than notes made after the fact.
Canceled checks and electronic payment confirmations, which pin down the exact dollar amount and recipient.
Calendar entries and appointment records, which tie the payment to a specific meeting, client visit, or business event.
Digital payment app logs from services like PayPal, Venmo business accounts, and Square, which capture time, vendor, and amount.
Duplicate receipts from vendors. Many businesses can reprint a receipt or send a transaction history on request.
Written statements from a colleague, client, or business associate who participated in the activity.

No single piece of secondary evidence is required. What matters is assembling enough overlapping records to confirm the amount, date, business purpose, and (where relevant) business relationship. A bank statement showing payment to a restaurant plus a calendar entry for a client lunch on the same date creates a persuasive record without the original receipt.

Reconstructing Expense Records

If you realize receipts are missing, start gathering secondary documentation right away. A systematic reconstruction goes further than a scramble the week before an audit:

Download bank and credit card statements for the tax year and highlight every business-related transaction.
Cross-reference each transaction with your calendar, email, and client records to match the payment to a specific business purpose.
Enter each expense into a spreadsheet or accounting program with the date, amount, vendor, and business purpose linked together.
Contact vendors for duplicate receipts. Retailers and service providers can often reprint them or send transaction histories.
For anything you cannot fully verify, note the estimated amount and the basis for the estimate.

The finished log should read as a clear narrative an auditor can follow, with each expense tied to a specific business activity or client. Chronological order, grouped by category, makes it easier to review. Keep the log alongside the supporting documents in one digital folder, with backups.

When You Can Estimate and When You Can’t

If you can prove a deductible expense happened but cannot pin down the exact amount, the Cohan rule allows the IRS or a court to accept a reasonable estimate. The principle comes from a 1930 Second Circuit decision involving entertainer George M. Cohan, where the court held that absolute certainty is usually impossible and the tax authority should make the best approximation it can.⁵ A taxpayer whose lack of precision is their own fault will receive a less favorable estimate.

The Cohan rule is not a blank check. Courts have declined to apply it when the taxpayer offers no credible evidence at all. You need something for the court to work with, like a bank statement showing the payment or a calendar entry tying the expense to a business event. Without that foundation, the deduction is denied entirely.

There are also hard statutory limits. Internal Revenue Code Section 274(d) overrides the Cohan rule for travel (including meals and lodging away from home), business gifts, and listed property such as vehicles used partly for business.⁶ For those categories you must have adequate records or corroborating evidence of the amount, time, place, business purpose, and business relationship. Estimates alone will not work. The Cohan rule stays available for general business operating costs outside Section 274(d), such as office supplies, software subscriptions, and professional services.

Vehicle Expenses Without Gas Receipts

Car expenses are one of the most common places receipts go missing, and vehicles fall under Section 274(d) as listed property.⁷ The simplest way to claim vehicle expenses without saving every gas and maintenance receipt is the standard mileage rate, which for 2026 is 72.5 cents per mile driven for business.⁸

Even at the standard rate, you need a mileage log. Publication 463 lists what each entry should contain:³

The date of each business trip.
The destination city, town, or area.
The business purpose, such as a client meeting, supply pickup, or job site visit.
The miles driven for each business use.
Starting and ending odometer readings for each trip, plus total miles for the year.

A smartphone app that records GPS data in real time is the easiest way to keep this log. Reconstructing a log after the fact means going back through your calendar, client records, and mapping software to estimate distances as accurately as possible. Commuting from home to a regular workplace does not count as business mileage.

Per Diem Rates for Travel Meals and Lodging

If you travel for business, per diem rates let you deduct meals and lodging without tracking every meal receipt. The method substitutes a fixed daily allowance for actual expense documentation. For the period starting October 1, 2025, the IRS high-low simplified method sets the per diem at $319 per day for high-cost localities and $225 per day for other locations within the continental United States.⁹

If you only need to substantiate meals and incidentals, the meals-only rates are $86 per day for high-cost localities and $74 for other locations. Transportation industry workers have a separate flat rate of $80 per day within the continental United States and $86 per day outside it.⁹

Per diem does not eliminate all record-keeping. You still need to document the date and location of each trip and the business purpose, and if you use the meals-only rate you need to keep lodging receipts separately. The per diem method simply replaces individual meal receipts with a pre-approved daily amount.

Digital Records and Scanned Receipts

Storing expense records digitally is fine, provided your system meets basic reliability standards. Under Revenue Procedure 97-22, an electronic storage system must accurately transfer records from their original form, prevent unauthorized changes, and let the IRS retrieve and reproduce readable copies during an audit.¹⁰

In practice, that means indexing so you can find records quickly, controls that prevent accidental deletion or alteration, and the ability to produce paper copies on request. Most cloud accounting platforms and receipt-scanning apps meet these requirements by default. Scanned receipts carry the same weight as paper originals, so you do not need to keep physical copies if your electronic system is reliable and organized.

What Happens If Your Records Don’t Hold Up

The burden of proving every entry and deduction on your return falls on you as the taxpayer.⁴ If records are inadequate, the immediate cost is the disallowed deduction. Beyond that, the accuracy-related penalty adds 20 percent to any underpayment caused by negligence or disregard of IRS rules, and the IRS defines negligence broadly enough to include chronic failure to keep records.¹¹

Poor records can also extend how long the IRS has to audit you. The standard window is three years from the filing date. If undocumented deductions cause you to underreport income by more than 25 percent, that window extends to six years.¹² A well-organized reconstruction, done before the IRS asks, changes the conversation from “can you prove this happened” to “here is the evidence,” which is a much stronger position.

1
eCFR. 26 CFR 1.274-5 – Substantiation Requirements
2
Office of the Law Revision Counsel. 26 U.S. Code 6001 – Notice or Regulations Requiring Records
3
Internal Revenue Service. Publication 463 – Travel, Gift, and Car Expenses
4
Internal Revenue Service. Burden of Proof
5
Legal Information Institute (LII). Cohan Rule
6
Office of the Law Revision Counsel. 26 U.S. Code 274 – Disallowance of Certain Entertainment, Etc., Expenses
7
Office of the Law Revision Counsel. 26 U.S. Code 280F – Limitation on Depreciation for Luxury Automobiles
8
Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents
9
Internal Revenue Service. 2025-2026 Special Per Diem Rates
10
Internal Revenue Service. Revenue Procedure 97-22 – Guidance for Electronic Storage Systems
11
Office of the Law Revision Counsel. 26 U.S. Code 6662 – Imposition of Accuracy-Related Penalty on Underpayments
12
Internal Revenue Service. Time IRS Can Assess Tax