Eight Dollar Blog

5. Document Use of Your Office in Your Tax Diary. This is where a tax diary can pay for itself a hundredfold. Use your tax diary to record what activities you performed in your home office such as, “studied for my network business from 8 a.m. to 9 a.m.,” or
“made calls from 9 a.m. to 12 p.m., HO (home office).” This work activity log in your diary does not need to be an elaborate document; simply keep some notes about what you did during the day. If you ever get audited, you may have to answer questions about work or phone calls or training sessions that occurred two or three years prior.

When you make long distance calls, are you required to write down
every person’s name that you call in your tax diary? Generally not. But you should log it somewhere as a business-related call. During an audit, the IRS would ask, “Is this particular activity business or personal?” If you have not kept a log of your daily business activities, how will you ever know? You can look at your phone bill from three years previous and not be able to discern what calls were made for business and what were made for pleasure. Don’t forget, the IRS, if it audits you, will not be doing so the same year you make
those calls.

Remember, keep a good tax diary and organize all records.

Taken from : Money Mastery “10 Principles That Will Change
Your Financial Life Forever