Tax time comes once a year, but often the records build up. Here are some tips for getting your records in order so that you don’t pay more than "your fair share" to the IRS.
1. If you have employees, finish up all of your quarterly tax forms by January 31st. The Quarter 4 941 form, NH Quarterly Wage Report, and the annual 940 are all forms that need to be filed along with a check for the liabilities owed if you have not submitted them online or through your bank. You also need to send W2’s to any employee who worked for you last year, and a 1099-MISC to any unincorporated subcontractor that you paid a total of more than $600 during the year.
2. Subtotal your income and expenses by the categories on your tax return. For example, if you are a sole proprietor, Schedule C will request totals for Advertising, Commissions & Fees, Contract Labor, Legal & Professional Services, and Supplies. If you are using software such as QuickBooks and are caught up with your data entry, print a Profit and Loss Summary report and review the categories. Match them up with the appropriate Schedule C categories. You can also run the Income Tax Preparation report to set up tax account mappings for all of your accounts. Then print the Income Tax Summary and you have a report subtotaled by each tax category.
3. Some categories do not have a direct correlation between money spent and what is deductible. Automobile expenses are a good example of this. If you are claiming the standard mileage deduction, which was 50 cents per mile for 2010, then what you spent for gas and repairs will differ from the Automobile Expenses you claim on your tax return. Whether you claim Actual Expenses or Standard Mileage however, you still need to keep mileage records of your total and business miles. You can also claim parking and tolls in addition to either method.
4. If you are not using an automated software package, sort your receipts by category and total each category. Bring the totals to your tax preparer or CPA. Your tax preparer does not want to see your pile of receipts, and does not need to double-check your totals. It will just cost you more (and often a lot more) to have your CPA total your receipts and will often delay your return process (and your refund!) Ultimately, your tax return is your responsibility and you will incur the penalty if your tax return contains inaccurate or misleading information. Bring organized totals to your tax preparer, but keep your receipts in case the IRS questions you later.
5. Consider e-filing your taxes. A growing proportion of taxpayers are e-filing their returns, and it is fast and easy. You can e-file at any professional tax preparer, through online software like TurboTax, and even for free through the IRS Free File program. You can get your refund direct deposited to your bank account in as little as 10 days. Click here for more information on IRS Free File: http://www.irs.gov/efile/article/0,,id=118986,00.html
1. If you have employees, finish up all of your quarterly tax forms by January 31st. The Quarter 4 941 form, NH Quarterly Wage Report, and the annual 940 are all forms that need to be filed along with a check for the liabilities owed if you have not submitted them online or through your bank. You also need to send W2’s to any employee who worked for you last year, and a 1099-MISC to any unincorporated subcontractor that you paid a total of more than $600 during the year.
2. Subtotal your income and expenses by the categories on your tax return. For example, if you are a sole proprietor, Schedule C will request totals for Advertising, Commissions & Fees, Contract Labor, Legal & Professional Services, and Supplies. If you are using software such as QuickBooks and are caught up with your data entry, print a Profit and Loss Summary report and review the categories. Match them up with the appropriate Schedule C categories. You can also run the Income Tax Preparation report to set up tax account mappings for all of your accounts. Then print the Income Tax Summary and you have a report subtotaled by each tax category.
3. Some categories do not have a direct correlation between money spent and what is deductible. Automobile expenses are a good example of this. If you are claiming the standard mileage deduction, which was 50 cents per mile for 2010, then what you spent for gas and repairs will differ from the Automobile Expenses you claim on your tax return. Whether you claim Actual Expenses or Standard Mileage however, you still need to keep mileage records of your total and business miles. You can also claim parking and tolls in addition to either method.
4. If you are not using an automated software package, sort your receipts by category and total each category. Bring the totals to your tax preparer or CPA. Your tax preparer does not want to see your pile of receipts, and does not need to double-check your totals. It will just cost you more (and often a lot more) to have your CPA total your receipts and will often delay your return process (and your refund!) Ultimately, your tax return is your responsibility and you will incur the penalty if your tax return contains inaccurate or misleading information. Bring organized totals to your tax preparer, but keep your receipts in case the IRS questions you later.
5. Consider e-filing your taxes. A growing proportion of taxpayers are e-filing their returns, and it is fast and easy. You can e-file at any professional tax preparer, through online software like TurboTax, and even for free through the IRS Free File program. You can get your refund direct deposited to your bank account in as little as 10 days. Click here for more information on IRS Free File: http://www.irs.gov/efile/article/0,,id=118986,00.html
