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To Her Credit

For tax purposes, card statements aren’t detailed receipts

Summary

Don’t rely on your card statement if you want a precise record of spending; keep that original paper receipt

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Question

Dear Sally,
I used my Home Depot credit card to pay for upgrades to several different real estate properties over the past seven years.

I have been trying to get Home Depot to provide me with detailed transaction records showing what specific items were purchased (and when) over the entire seven years so that I can designate which home received what items and at what cost during renovations for tax purposes. Home Depot continues to send me account summary statements, which are very nonspecific. These account summaries indicate invoice numbers generated by only citing the department from which the items were purchased, not the specific items.

I have one personal and two commercial cards, on which I charged $190,000. I have paid off all but $41,000 total on all three cards.

Does Home Depot have a duty to maintain the invoice records, and are they required to produce these invoices if I request them? This has been extremely frustrating.  — Andrea

Answer

Dear Andrea,
It’s so easy these days to log on to your account and get information that we sometimes take for granted that the information will be unlimited and always available. I can look on Amazon, for example, and see exactly what I’ve purchased for years, and even search for certain purchases. Unfortunately, you can’t count on always being able to get this information, especially not after a long period of time.

Jeff Rose, CFP and founder of GoodFinancialCents.com, says, “Merchants have to retain receipts for 18 months to fight chargebacks, and the IRS recommends that merchants retain credit card receipts for three years for tax purposes.”

Seven years is far longer than either of these requirements. Rose says, “Unfortunately, there is no statutory reason for Home Depot to retain or release these records.”

If you’ve sold the properties, and are preparing your tax return and need to allocate expenses to each property, I can see why this information would be necessary.

If that’s the case, all is not lost. You have credit card records showing the amounts you spent all total. You can surely remember the basic projects you completed on each house, and a general idea of how much you spent proportionally on each one. If you did have itemized receipts that showed every 2-by-4 and plumbing part you purchased, you still wouldn’t know which house each receipt applied to. Do the best you can. If you’re ever audited, be prepared to show the Internal Revenue Service your account summary statements and how you arrived at the allocation of $190,000 in expenses between your properties.

From now on, be sure to save annotated receipts for items you purchase, or that other people purchase on your behalf. Online records often help, but there’s nothing like having a solid recordkeeping system, backed up by your own copies of receipts.

See related: What records to keep, how long to keep them

 

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