Will a cancelled check suffice in place of a receipt?

[Shane Moss]

Will a cancelled check suffice in place of a receipt? I ask because I recently had my property completely re-plumbed by my co-worker's brother. I've been so busy I didn't think about having him sign a receipt and since he was doing this on the side, he works for a plumbing company, he wouldn't have had a receipt ready. I can ask him to sign a receipt, but if he's reluctant because of tax reasons, will the cancelled check that I wrote to him work for the deduction?

[Account Closed]

A canceled check may be okay, but you will need to send a 1099. Otherwise you may find the payment disallowed in an audit. The IRS is cracking down on subcontractors.

It is not unusual for IRS agents to find additional people to audit because they uncover cash payments. Either the cash payments are disallowed or they will try to go after those that got paid in cash.