Claiming a deduction is one thing. Proving it is another.

Tax deductions can help reduce your tax liability, but claiming unusually large expenses without proper documentation may attract additional attention from the IRS.

Whether you’re a small-business owner, self-employed professional, or individual taxpayer, understanding the rules and maintaining accurate records can make a significant difference if your return is questioned.

A recent Kiplinger Tax Letter highlighted cases involving business vehicle expenses and charitable contributions, illustrating how important documentation can be when the IRS challenges a deduction.

Here are three important ways to protect yourself.

1. KEEP ACCURATE RECORDS.

Good documentation is your first line of defense.

The IRS requires taxpayers to maintain records that support the deductions claimed on their tax returns. Without proper documentation, even legitimate expenses may be disallowed.

For small-business owners and self-employed individuals, this can include receipts, invoices, mileage logs, and records showing the business purpose of an expense.

For charitable contributions, taxpayers must follow specific documentation requirements, which may include written acknowledgments from charitable organizations.

In one Tax Court case highlighted by Kiplinger, a couple lost a substantial charitable deduction because they failed to provide the required supporting documentation.

The takeaway: Don’t wait until the IRS questions your return to organize your records. Accurate, complete documentation can help protect the deductions you’re entitled to claim.

2. MAKE SURE YOUR DEDUCTIONS QUALIFY.

A legitimate expense isn’t automatically a deductible expense.

Not every business expense or charitable contribution qualifies for a tax deduction. The IRS has specific rules governing what can be deducted, how much can be claimed, and what documentation is required.

For example, business vehicle deductions must be supported by records establishing business use. Taxpayers who use their personal vehicles for business purposes should maintain accurate mileage records and distinguish business travel from personal use.

Likewise, charitable deductions must meet IRS requirements regarding eligible organizations, contribution values, and supporting documentation.

Large deductions in relation to reported income may receive additional scrutiny, but that doesn’t automatically mean the deductions are improper.

The takeaway: Understanding deduction requirements before filing your return can help reduce the risk of costly mistakes, denied deductions, and additional tax assessments.

3. BE PREPARED TO RESPOND.

An IRS audit doesn’t automatically mean you’ve done something wrong.

If the IRS questions a deduction, how you respond can be just as important as the deduction itself.

The IRS may request receipts, financial records, mileage logs, or other supporting information. Responding promptly and providing organized documentation can help establish the legitimacy of your deductions.

In another case reported by Kiplinger, a self-employed property inspector successfully defended substantial vehicle deductions after presenting mileage logs, service records, and other supporting evidence to the Tax Court.

The case illustrates an important point: An IRS challenge doesn’t necessarily mean a taxpayer’s deduction will be disallowed.

However, every situation is different, and taxpayers should carefully review IRS correspondence, understand response deadlines, and seek professional guidance when necessary.

The takeaway: Being prepared and understanding your rights can help you navigate an IRS examination with greater confidence.

Facing an IRS Audit? Know Your Options.

An IRS audit can be stressful, especially when substantial deductions or unexpected tax liabilities are involved.

But receiving an IRS notice doesn’t mean you have to face the situation alone.

IRS Help can assist taxpayers in understanding IRS concerns, reviewing available documentation, and exploring appropriate options for addressing tax problems.

Don’t let an IRS audit become a bigger tax problem.