A word of advice to all who mess with the IRS. Business owners will find themselves in financial troubles eventually if they cheat the IRS by making deductions that are truely personal on their business account. If you under report income you actually bring in you will be caught up with. The IRS is focusing on the gap that is costing millions from non- reported income and will come down hard on you if you do not report what you earn.
Business owners do not need to cheat or under report income as there is a variety of different deductions and tax breaks allowed. Its smart business to take advantage of whats available and stay in line, plain and simple. Why spend time dedicated to cheating the IRS, Take advantage of available deductions and tax breaks legally in place for business owners.
Practice good business habits, It’s good for business.

Larrie Perkins

Taxpayers are required to keep accurate , permanent records and books used to determine types of income, gains, expenses, looses, along with other items that may affect one?s income liability for the year.
Record retention showing all sources of income you received, including all W-2 forms, 1099 and 1098 forms and end year statements of compensation received from financial institutions, banks and brokers.
If you have a deductible item you are claiming on your return, retention of a document or receipt proving the expense actually existed and method of payment( such as a canceled check, credit card receipt or bank statement itemizing your checks ) used during eligible tax year. Items paid during tax year are deductible; items not paid during tax year are not.If you are claiming employee business expenses, the recordkeeping for each type of expense applies as if you were a business owner.
If you paid alimony or received it, you should keep a copy of the separation agreement or divorce decree. (Always)
If you are claiming the child care credit, your records must include the name, address, and Social Security number or employer identification number of all caregivers. You will need this information in completing IRS form 2441.
If you claim deductions for charitable contributions, you may need to get a receipt from the organization to which you made the donation, or an appraisal of the item. It is best to have a receipt on official letterhead, signed and dated.
If you have gambling winnings, you should be keeping a diary of your winnings and losses that includes the date, type of activity, and location of the establishment, the names of other people who were present, and the amount you won or lost. Business-related records, automobile expense records and capital asset records require special bookkeeping rules covered in my next post.
It is a must to retain all of these records as long as they may be relevant for any tax purpose, or for a minimum of four years.
Tax record keeping is a requirement and definitely makes life easier in case of audit. (been there, done that)
If you have a question use my quest book @ TaxMart with your question.
?An informed taxpayer saves both money and time.?
Larrie

TaxMart

record keeping tax

Emotions of divorce can be overwhelming but knowing what to expect when filing one?s taxes need not be overlooked. Understanding your tax filing options can and will make for no surprises as far as taxes goes. Divorced with children makes for special considerations to understand how your tax filing is affected. For instance, if you are the non-custodial parent and want to claim your child or children as a dependent, you must get form 8332 signed or stated in the divorce decree allowing you the right to claim your dependents. Form 8332 is the official form of the IRS for wavier to claim a dependent. In fact, you can use any kind of release as long as it spells out who get the deduction. The custodial parent always has control over this and for the release to be legal must be signed by the custodial parent.
The length of time of release (either 1 year or all future years), the wavier must be clear and explicit, signed and dated. In my experience, if wavier is included in divorce decree, this in itself saves communicating and negotiating with ex-spouse in the future.
The non-custodial parent, with social security numbers and date of birth of dependent?s presents wavier to tax preparer and/or attaches wavier to their return. The wavier must be sent to IRS to confirm status when filing. The non-custodial parent now has the right to claim the $1,000 child tax credit per dependent as long as the child is less than 17 years of age during current tax year.
If dependent(s) is over 17 years of age during tax year the credit is phased out, only leaving the standard deduction for each dependent. The custodial parent by signing release stills get to claim head-of-household status, the earned income credit, and dependent care credit even though they have released the right to claim the child as a dependent. If you are in a higher tax bracket than your ex-spouse, modifying agreements to re-characterize payments as alimony would bring tax savings that could be shared by both parties. Child support is nondeductible by the payer, and is not included in the taxable income of the recipient.
Alimony is the exact opposite, the payer deducts the alimony payment, and the recipient includes the alimony as income on his or her tax return. If you are legally required to pay any medical expenses for your ex-spouse, deduct the expenses as alimony instead of on Schedule A as an itemized deduction. If you do not have custody of your child, you can still deduct your child?s medical expenses on your tax return if you are the one that pays the medical expenses. Form 1040 Schedule A. Usually agreement are easier at time of divorce and should be considered at that time.
If you need clarification, contact me or use my guess book for your question @ TaxMart
?An Informed Taxpayer Saves Money?
Larrie
TaxMart
divorcetaxtips@onlinetaxmart.com

tax tip divorce