When you prepare your tax return, you'll need records for deductions, expenses or credits you want to claim. Canceled checks serve as proof of amounts you paid. You won't need to submit canceled checks with your return when you file it, but you do need to keep copies of canceled checks or other items used to calculate your expenses with your personal tax records.
Canceled Checks and Tax Returns
A canceled check can be used as proof of payment for a tax-deductible expense. Your check shows the name of the company or person you paid, the date, and the amount paid. These are all important pieces of information you’ll need when you piece together the items to include on your tax return.
When a Canceled Check Receipt Isn't Enough
If you need an itemized record of specific items or services you received for your payment, your canceled check receipt won’t be sufficient. A physical receipt or invoice lists each item and amount separately, while your canceled check only proves a total amount paid to a merchant or person, as written on the check itself.
Using canceled checks to prepare your return is fine – you (or your tax preparer) have all the information you need to enter information for your deductions or credits with a canceled check. However, in the event of an audit, your examiner may request itemized records for your purchase to verify all the money you spent went toward allowable expenses. An example might be a bill or receipt in a restaurant. Exceptions do apply, so use your best judgment when deciding whether your canceled check proof of payment will be sufficient – or ask a tax professional if you’ll need more support to prove your entries in the event of an audit.
For example, if your canceled check shows a payment to an insurance company and you’re taking a health insurance medical deduction, you probably won’t need an itemized receipt. However, if you’re taking a small-business deduction for office supplies, a canceled check to an office supply store or general merchant won’t give an auditor enough detail about the items you purchased.
Don’t assume you won’t be able to get itemized information about your purchases if you decide you might need it and all you actually have is a canceled check. If you purchase items online or pay for services, many vendors have all your customer order information on file. These companies can issue an extra invoice if you ask for one – you might also already have a copy of your invoice in your email inbox.
You may not be able to get itemized receipts from all large general merchants, such as big-box stores, department stores or grocery stores, but you may be able to get the information by contacting the store.
If You're Filing for 2018
The regulations on canceled checks as receipts haven't really changed for those filing their 2018 taxes. You should keep your tax receipts for three years, just in case. File them with your tax paperwork. If your canceled checks are for charitable contributions, however, you may not be itemizing deductions under the new 2018 tax rules, which doubles the standard deduction.
If You're Filing for 2017
Those filing in 2017 may find canceled checks to be useful in calculating deductions. The 2017 standard deduction is $6,350 for singles and $12,700 for married couples.
With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.