Can I deduct contractor payments without a receipt?

Yes — you can often deduct contractor payments without a traditional receipt, but you still need adequate records to support the expense.

A receipt is helpful, but it is not the only kind of evidence that can substantiate a business deduction. Other records that may help include:

• Bank or credit card statements showing the payment
• Canceled checks
• Payment app records such as PayPal or Venmo
• Invoices, contracts, statements of work, emails, or texts showing what was purchased and that it was business-related
• A contemporaneous log noting the date, amount, who was paid, and the business purpose

Keep in mind:

• Proof that you paid someone is not enough by itself; you also need to show the expense was ordinary and necessary for your business.
• Form 1099-NEC may be required for many payments of $600 or more to nonemployee contractors, but a 1099 does not by itself prove the deduction.
• If you paid in cash and have little documentation, the deduction is more vulnerable if the IRS asks for support. The safer approach is to reconstruct records as much as possible and keep any emails, messages, invoices, or written acknowledgment you can obtain.

Best practice is to keep a file for each contractor with the agreement, invoices, proof of payment, and notes about the work performed. If you’re unsure, check with a tax professional or the IRS instructions for contractor reporting and business expense substantiation.