(a) Yes. (b) No.
(c) A resounding yes.
There are two categories of receipts in our world as tax advisors:
- Ones that are being deducted or claimed on a tax filing; and
- Ones that are not.
It is pretty clear that you need them for things that are deducted. What is less clear is that you might be happy to also have ones that are not being deducted. I will tell a little story about saving the ones that are being deducted.
We had an audit once where the auditor disallowed the insurance expense for a vehicle because the receipt had been lost. We argued unsuccessfully that the insurance was paid and proved the payment and that it had been continuously insured for years and could provide other years receipts. The cost of attending tax court where we likely would have won on the balance of other evidence was too high for the client. As for other expenses that you do not deduct you should consider if they help support the story.
We had an audit once where a client deducted a trip to Hawai’i for business. The auditor argued that there was a personal element and thus the claim was not valid. The client argued back that they did in fact also have some personal element in the trip but had taken care to pay for those personal expenses personally. The receipts that were not deducted for things paid personally like meals with friends as opposed to business meeting meals were convincing enough that the auditor backed down.