Guide to reimbursement receipts: Requirements and best practices

Andrey_Popov // Shutterstock

 

Reimbursement receipts are proof-of-purchase documents that employees submit to get repaid for business expenses they covered out of pocket. They’re a critical part of your company’s expense reimbursement policy, serving as official documentation of legitimate business spending and ensuring tax compliance.

Below, Ramp takes a closer look at what reimbursement receipts are, when they are and aren’t required, and what information they should contain. This story will also walk through some common challenges businesses face when dealing with reimbursement receipts and share strategies to help streamline your processes.

What is a reimbursement receipt?

A reimbursement receipt serves as proof of payment that an employee incurred a business expense on your company’s behalf. When the employee submits a reimbursement request, they attach the reimbursement receipt as supporting documentation that justifies the purchase and proves they paid for the expense with their own money.

Reimbursement receipts come in various formats, from paper receipts issued at the point of sale to digital receipts that are texted or emailed to the purchaser. Other supporting documents that can sometimes act as proof of a business purchase include credit card statements, paid invoices, or canceled checks, though itemized receipts are by far the preferred form of evidence.

Beyond simple repayment, reimbursement receipts serve other key business purposes:

• Create an audit trail for tax compliance and internal reviews.
• Track spending against departmental and project budgets.
• Enforce company expense policies by verifying purchase details.

Types of expenses that require receipts

Any purchase employees make on your company’s behalf must be supported by a receipt or other documentation. This is true regardless of whether reimbursement is required.

If your employee made a purchase using their own money, a receipt is necessary to trigger reimbursement. If the purchase was made with company funds—for example, with a company credit card—you still need a receipt for your business records.

Here are some common reimbursable expenses that require receipts.

• Travel expenses: This is often the largest category of reimbursable costs and includes flights, trains, hotels, rental cars, rideshares, parking fees, and tolls.
• Meals and entertainment: These expenses need careful documentation since they face extra IRS scrutiny. You’ll need receipts for client lunches, team dinners during travel, and business meeting refreshments.
• Office supplies and equipment: This covers everything from printer paper and pens to monitors and ergonomic chairs for remote work setups.
• Professional development and training: Conference fees, online courses, certification exams, and educational materials all require receipts.
• Client-related expenses: This might include presentation materials, client gifts (within IRS limits), or travel to client sites. These receipts often require additional context about the client and project.

Expenses that don’t require receipts

While it’s a good business practice to always collect reimbursement receipts, there are instances where they aren’t strictly necessary.

For example, if you provide your employees with a stipend or per diem, you don’t need to collect a receipt since you don’t actually need to reimburse the purchases. Whether or not you require receipts in these instances is ultimately a matter of corporate policy.

Likewise, if your employees use personal vehicles for business travel and you use the standard mileage rate for mileage reimbursement, you don’t need to collect any receipts. You should, however, require other supporting documentation in the form of a mileage log or trip log.

Receipt requirements for reimbursement

A reimbursement receipt confirms that your employee made a legitimate business purchase that warrants repayment. It also serves as essential documentation for business tax deductions.

Essential receipt information

Every reimbursement receipt needs five critical details to be considered valid.

1. Date of purchase: the date and time that the employee made the purchase.
2. Vendor name and details: the name of the retailer, vendor, or supplier where the purchase was made, along with details and contact information like address, phone number, email, and website.
3. Itemized list of purchases: a detailed description of the items or services purchased, including quantities and unit prices.
4. Total amount paid: how much was spent on the purchase. It must be clearly visible and match what the employee claims on their expense report.
5. Payment method: how the purchase was completed, whether via cash, debit card, credit card, or some other form of payment.

IRS receipt requirements: The $75 rule and accountable plans

The IRS has clear documentation requirements that every business must follow. The most important rule is the $75 threshold: You must have documentary evidence for all lodging expenses, and any other single expense of $75 or more. For expenses under $75, employees can use an expense log instead of an actual receipt, though many companies still require one.

To ensure reimbursements aren’t considered taxable income for your employees, they must fall under an accountable plan. This IRS framework has three core requirements:

1. Expenses must have a clear business connection.
2. Employees must substantiate expenses with receipts in a timely manner.
3. Employees must repay the company for any excess reimbursement or allowance.

The IRS defines a “reasonable time” for submission as 60 days after the expense occurs. Missing this deadline can turn a tax-free reimbursement into taxable wages for the employee.

Why finance teams need receipts for reimbursement

Receipt requirements protect both your employees and your company through compliance controls and accurate financial reporting. These documents do more than justify repayment; they safeguard against regulatory penalties and financial losses.

Prevents errors and fraud

Receipt requirements catch duplicate submissions where employees request reimbursement twice for the same expense, whether due to error or intentional expense fraud. Itemization reveals personal expenses hidden in business purchases, like adding family members to hotel rooms or buying personal items during supply runs.

Detailed receipts also expose policy violations before payment, such as first-class travel without authorization or expensive meals exceeding per-person limits. This upfront detection prevents awkward clawbacks and policy disputes after reimbursement.

Protects tax-free treatment

Proper documentation is required to keep reimbursements from becoming taxable income for employees. Without receipts that meet accountable plan rules, reimbursements are treated as wages, creating unexpected tax bills for employees and extra payroll tax obligations for the company.

The documentation also supports business expense deductions on corporate tax returns. Missing or inadequate receipts during an audit can trigger deduction denials, penalties, and interest charges going back years.

Supports accurate budgeting and audits

Receipt data feeds directly into financial reporting, showing actual spending patterns versus budget allocations. Itemized details reveal spending trends, highlight cost-saving opportunities, and inform future budget planning.

During an audit, complete documentation is non-negotiable. Missing receipts can lead to denied tax deductions, financial penalties, and interest charges.

Common problems with reimbursement receipts (and how to fix them)

Even with clear policies, receipt issues are common. Here’s how to handle the most frequent problems.

Damaged or lost receipts

The fix: When employees lose an original receipt, they can submit a missing receipt affidavit—a signed statement explaining the expense. You can then combine this with a credit card statement as supporting proof. For damaged or faded receipts, contact the vendor and ask if they can send a duplicate copy.

Unmatched card charges

The fix: This happens when a charge appears on a statement without a corresponding receipt. Enforce a policy that requires employees to submit receipts within a few days of the transaction. If you have a corporate card with integrated expense management software, you can set automatic reminders for employees or block cards with too many unmatched transactions.

Illegible or incomplete receipt images

The fix: Train employees to check image quality immediately after digitally capturing receipts. Taking photos on a flat surface in natural light produces the best results. If an image is unreadable, request a new one before the original receipt gets lost or fades.

Best practices to validate, store, and retrieve reimbursement receipts

Outlining a clear receipt submission workflow ensures compliance while minimizing administrative burden. Incorporate these steps into your expense reimbursement policy.

1. Require digital scans

One way to avoid damaged, degraded, or lost physical receipts is to require employees to upload a digital scan of their receipts along with their expense reports.

Having a digital copy eliminates the risk of degradation or other damage and makes it easier to match receipts with their corresponding expenses in your accounting records. That being said, it’s always a good idea to hold onto the original receipt in case you’re asked to produce it for inspection.

2. Enable real-time receipt upload

While employees can lose receipts anywhere, it’s especially common when they’re traveling for business. In these situations, employees will typically stockpile all the receipts related to their trip and upload them en masse when the business trip is done.

Of course, this increases the likelihood that a receipt might be misplaced or damaged. Facilitating the real-time upload of receipts—for example, by choosing expense management software that includes a mobile app with receipt scanning capabilities—reduces this risk.

3. Retain receipts for at least 7 years

As proof of purchase for business-related expenses, receipts serve an important role in documenting your business’s activities. This is especially true if you claim any expense deductions from your business income tax return.

Unfortunately, if the IRS decides to audit your business, it can go back several years—up to six, depending on the circumstances. With this in mind, it’s a good idea to retain all reimbursement receipts for at least seven years, though some businesses choose to keep records for longer.

This story was produced by Ramp and reviewed and distributed by Stacker.