What do taxpayers need to provide to substantiate their deductions?

Taxpayers are required to provide proper documentation, such as receipts and bank statements, to substantiate their deductions. This requirement stems from the need for verifiable evidence to ensure that the deductions claimed are legitimate and align with tax regulations. Receipts serve as proof of expenses incurred, while bank statements can corroborate financial activity related to those expenses.

Using oral explanations or general estimates does not provide sufficient verification for tax claims. Oral descriptions lack the concrete evidence needed to support the deductions, while estimates can be unreliable and not based on actual expenses incurred. Informal records kept at home, while possibly helpful, do not meet the standards of formal documentation that the tax authorities require for substantiation. Overall, maintaining detailed and organized documentation is crucial for taxpayers to defend their deductions in the event of an audit.