I am putting the final touches on an audit I have been handling for a client. If you are self-employed, credit card statements and bank statements are good documents to support your business expenses. However, if you have expenses that are hard to identify by the bank/credit card statements: KEEP YOUR INVOICES. You will save yourself a lot of grief if you get audited.
On another note: word on the IRS street is there is going to be a lot more S-CORPORATION audits going forward. S- corporations are the entities in which income is passed through to the owners and reported on their individual tax returns.
