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File Amended Tax Return Online

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File Amended Tax Return Online

File amended tax return online Publication 938 - Main Content Table of Contents Who May Request Information How To Request Information Who May Request Information The persons listed below, or their agent or representative, should follow the procedures in this publication to request tax information from the representative of the REMIC or the issuer of the CDO. File amended tax return online Any broker who holds a REMIC regular interest or CDO for itself or as a nominee for an actual holder. File amended tax return online A middleman who holds a REMIC regular interest or CDO as a nominee for an actual holder and who is required to file an information return with respect to the regular interest or CDO. File amended tax return online The following persons, if they hold their REMIC regular interest or CDO directly and not through a nominee. File amended tax return online A corporation. File amended tax return online A fiscal year taxpayer. File amended tax return online A dealer in securities or commodities required to register as such under the laws of the United States or a state. File amended tax return online A real estate investment trust (as defined in section 856). File amended tax return online An entity registered at all times during the tax year under the Investment Company Act of 1940. File amended tax return online A common trust fund (as defined in section 584(a)). File amended tax return online A financial institution such as a mutual savings bank, savings and loan association, building and loan association, cooperative bank, homestead association, credit union, industrial loan association or bank, or other similar organization. File amended tax return online Any trust that is exempt from tax under section 664(c) (a charitable remainder annuity trust or a charitable remainder unitrust). File amended tax return online A REMIC. File amended tax return online Note. File amended tax return online A person listed in (3) above who holds an interest through a nominee (instead of directly from the REMIC or the issuer of the CDO) should request the information from the nominee instead of from the REMIC or the issuer of the CDO. File amended tax return online The request should be made of the nominee in the same manner as specified below for requesting information from the representative. File amended tax return online How To Request Information Use the directory to find the representative of the REMIC or issuer of the CDO. File amended tax return online You can request information from the representative or issuer by telephone or mail. File amended tax return online If only an address is listed in the directory, you must request the information in writing. File amended tax return online Your request must specify the calendar quarters and the classes of REMIC regular interests or CDOs for which you need the information. File amended tax return online The representative or issuer must provide the information to you by the later of: The 30th day after the close of the calendar quarter for which you request the information, or The 14th day after the receipt of your request. File amended tax return online The representative or issuer can provide the information to you by telephone, by written statement sent by first class mail, by printing the information in a publication that is generally read by and available to persons who may request the information (for example, a webpage), or by any other method agreed to by both parties. File amended tax return online If the information is published, the representative or issuer must notify you by telephone or in writing of the publication in which the information will appear, the date of its appearance, and, if possible, the page number. File amended tax return online Prev  Up  Next   Home   More Online Publications
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File amended tax return online Publication 583 - Main Content Table of Contents What New Business Owners Need To Know Forms of BusinessMore information. File amended tax return online More information. File amended tax return online Exception—Community Income. File amended tax return online Exception—Qualified joint venture. File amended tax return online More information. File amended tax return online More information. File amended tax return online Identification NumbersEmployer Identification Number (EIN) Payee's Identification Number Tax Year Accounting Method Business TaxesIncome Tax Self-Employment Tax Employment Taxes Excise Taxes Depositing Taxes Information Returns PenaltiesWaiver of penalty. File amended tax return online Business ExpensesBusiness Start-Up Costs Depreciation Business Use of Your Home Car and Truck Expenses RecordkeepingWhy Keep Records? Kinds of Records To Keep How Long To Keep Records Sample Record System How to Get More InformationInternal Revenue Service Small Business Administration Other Federal Agencies What New Business Owners Need To Know As a new business owner, you need to know your federal tax responsibilities. File amended tax return online Table 1 can help you learn what those responsibilities are. File amended tax return online Ask yourself each question listed in the table, then see the related discussion to find the answer. File amended tax return online In addition to knowing about federal taxes, you need to make some basic business decisions. File amended tax return online Ask yourself: What are my financial resources? What products and services will I sell? How will I market my products and services? How will I develop a strategic business plan? How will I manage my business on a day-to-day basis? How will I recruit employees? The Small Business Administration (SBA) is a federal agency that can help you answer these types of questions. File amended tax return online For information on how to contact the SBA, see How to Get More Information, later. File amended tax return online Forms of Business The most common forms of business are the sole proprietorship, partnership, and corporation. File amended tax return online When beginning a business, you must decide which form of business to use. File amended tax return online Legal and tax considerations enter into this decision. File amended tax return online Only tax considerations are discussed in this publication. File amended tax return online Your form of business determines which income tax return form you have to file. File amended tax return online See Table 2 to find out which form you have to file. File amended tax return online Sole proprietorships. File amended tax return online   A sole proprietorship is an unincorporated business that is owned by one individual. File amended tax return online It is the simplest form of business organization to start and maintain. File amended tax return online The business has no existence apart from you, the owner. File amended tax return online Its liabilities are your personal liabilities. File amended tax return online You undertake the risks of the business for all assets owned, whether or not used in the business. File amended tax return online You include the income and expenses of the business on your personal tax return. File amended tax return online More information. File amended tax return online   For more information on sole proprietorships, see Publication 334, Tax Guide for Small Business. File amended tax return online If you are a farmer, see Publication 225, Farmer's Tax Guide. File amended tax return online Partnerships. File amended tax return online   A partnership is the relationship existing between two or more persons who join to carry on a trade or business. File amended tax return online Each person contributes money, property, labor, or skill, and expects to share in the profits and losses of the business. File amended tax return online   A partnership must file an annual information return to report the income, deductions, gains, losses, etc. File amended tax return online , from its operations, but it does not pay income tax. File amended tax return online Instead, it “passes through” any profits or losses to its partners. File amended tax return online Each partner includes his or her share of the partnership's items on his or her tax return. File amended tax return online More information. File amended tax return online   For more information on partnerships, see Publication 541, Partnerships. File amended tax return online Husband and wife business. File amended tax return online   If you and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. File amended tax return online Do not use Schedule C or C-EZ. File amended tax return online Instead, file Form 1065, U. File amended tax return online S. File amended tax return online Return of Partnership Income. File amended tax return online For more information, see Publication 541, Partnerships. File amended tax return online Exception—Community Income. File amended tax return online   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. File amended tax return online S. File amended tax return online possession, you can treat the business either as a sole proprietorship or a partnership. File amended tax return online The only states with community property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. File amended tax return online A change in your reporting position will be treated as a conversion of the entity. File amended tax return online Exception—Qualified joint venture. File amended tax return online   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership for the tax year. File amended tax return online Making this election will allow you to avoid the complexity of Form 1065 but still give each spouse credit for social security earnings on which retirement benefits are based. File amended tax return online For an explanation of "material participation," see the Instructions for Schedule C, line G. File amended tax return online   To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. File amended tax return online Each of you must file a separate Schedule C or C-EZ and a separate Schedule SE. File amended tax return online For more information, see Qualified Joint Venture in the Instructions for Schedule SE. File amended tax return online Corporations. File amended tax return online   In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. File amended tax return online A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. File amended tax return online A corporation can also take special deductions. File amended tax return online   The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. File amended tax return online However, shareholders cannot deduct any loss of the corporation. File amended tax return online More information. File amended tax return online   For more information on corporations, see Publication 542, Corporations. File amended tax return online S corporations. File amended tax return online   An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation. File amended tax return online Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income. File amended tax return online On their tax returns, the S corporation's shareholders include their share of the corporation's separately stated items of income, deduction, loss, and credit, and their share of nonseparately stated income or loss. File amended tax return online More information. File amended tax return online   For more information on S corporations, see the instructions for Form 2553, Election by a Small Business Corporation, and Form 1120S, U. File amended tax return online S. File amended tax return online Income Tax Return for an S Corporation. File amended tax return online Limited liability company. File amended tax return online   A limited liability company (LLC) is an entity formed under state law by filing articles of organization as an LLC. File amended tax return online The members of an LLC are not personally liable for its debts. File amended tax return online An LLC may be classified for federal income tax purposes as either a partnership, a corporation, or an entity disregarded as an entity separate from its owner by applying the rules in regulations section 301. File amended tax return online 7701-3. File amended tax return online For more information, see the instructions for Form 8832, Entity Classification Election. File amended tax return online Identification Numbers You must have a taxpayer identification number so the IRS can process your returns. File amended tax return online The two most common kinds of taxpayer identification numbers are the social security number (SSN) and the employer identification number (EIN). File amended tax return online An SSN is issued to individuals by the Social Security Administration (SSA) and is in the following format: 000–00–0000. File amended tax return online An EIN is issued to individuals (sole proprietors), partnerships, corporations, and other entities by the IRS and is in the following format: 00–0000000. File amended tax return online You must include your taxpayer identification number (SSN or EIN) on all returns and other documents you send to the IRS. File amended tax return online You must also furnish your number to other persons who use your identification number on any returns or documents they send to the IRS. File amended tax return online This includes returns or documents filed to report the following information. File amended tax return online Interest, dividends, royalties, etc. File amended tax return online , paid to you. File amended tax return online Any amount paid to you as a dependent care provider. File amended tax return online Certain other amounts paid to you that total $600 or more for the year. File amended tax return online If you do not furnish your identification number as required, you may be subject to penalties. File amended tax return online See Penalties, later. File amended tax return online Employer Identification Number (EIN) EINs are used to identify the tax accounts of employers, certain sole proprietors, corporations, partnerships, estates, trusts, and other entities. File amended tax return online If you don't already have an EIN, you need to get one if you: Have employees, Have a qualified retirement plan, Operate your business as a corporation or partnership, or File returns for: Employment taxes, or Excise taxes. File amended tax return online Applying for an EIN. File amended tax return online   You may apply for an EIN: Online—Click on the EIN link at www. File amended tax return online irs. File amended tax return online gov/businesses/small. File amended tax return online The EIN is issued immediately once the application information is validated. File amended tax return online By telephone at 1-800-829-4933. File amended tax return online By mailing or faxing Form SS-4, Application for Employer Identification Number. File amended tax return online When to apply. File amended tax return online   You should apply for an EIN early enough to receive the number by the time you must file a return or statement or make a tax deposit. File amended tax return online If you apply by mail, file Form SS-4 at least 4 weeks before you need an EIN. File amended tax return online If you apply by telephone or through the IRS website, you can get an EIN immediately. File amended tax return online If you apply by fax, you can get an EIN within 4 business days. File amended tax return online   If you do not receive your EIN by the time a return is due, file your return anyway. File amended tax return online Write “Applied for” and the date you applied for the number in the space for the EIN. File amended tax return online Do not use your social security number as a substitute for an EIN on your tax returns. File amended tax return online More than one EIN. File amended tax return online   You should have only one EIN. File amended tax return online If you have more than one EIN and are not sure which to use, contact the Internal Revenue Service Center where you file your return. File amended tax return online Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. File amended tax return online The IRS will tell you which number to use. File amended tax return online More information. File amended tax return online   For more information about EINs, see Publication 1635, Understanding Your EIN. File amended tax return online Payee's Identification Number In the operation of a business, you will probably make certain payments you must report on information returns (discussed later under Information Returns). File amended tax return online The forms used to report these payments must include the payee's identification number. File amended tax return online Employee. File amended tax return online   If you have employees, you must get an SSN from each of them. File amended tax return online Record the name and SSN of each employee exactly as they are shown on the employee's social security card. File amended tax return online If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. File amended tax return online This may occur, for example, if the employee's name has changed due to marriage or divorce. File amended tax return online   If your employee does not have an SSN, he or she should file Form SS-5, Application for a Social Security Card, with the SSA. File amended tax return online This form is available at SSA offices or by calling 1-800-772-1213. File amended tax return online It is also available from the SSA website at www. File amended tax return online ssa. File amended tax return online gov. File amended tax return online Other payee. File amended tax return online   If you make payments to someone who is not your employee and you must report the payments on an information return, get that person's SSN. File amended tax return online If you make reportable payments to an organization, such as a corporation or partnership, you must get its EIN. File amended tax return online   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. File amended tax return online This form is available from IRS offices or by calling 1-800-829-3676. File amended tax return online It is also available from the IRS website at IRS. File amended tax return online gov. File amended tax return online    If the payee does not provide you with an identification number, you may have to withhold part of the payments as backup withholding. File amended tax return online For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. File amended tax return online Tax Year You must figure your taxable income and file an income tax return based on an annual accounting period called a tax year. File amended tax return online A tax year is usually 12 consecutive months. File amended tax return online There are two kinds of tax years. File amended tax return online Calendar tax year. File amended tax return online A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. File amended tax return online Fiscal tax year. File amended tax return online A fiscal tax year is 12 consecutive months ending on the last day of any month except December. File amended tax return online A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month. File amended tax return online If you file your first tax return using the calendar tax year and you later begin business as a sole proprietor, become a partner in a partnership, or become a shareholder in an S corporation, you must continue to use the calendar year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval. File amended tax return online You must use a calendar tax year if: You keep no books. File amended tax return online You have no annual accounting period. File amended tax return online Your present tax year does not qualify as a fiscal year. File amended tax return online You are required to use a calendar year by a provision of the Internal Revenue Code or the Income Tax Regulations. File amended tax return online For more information, see Publication 538, Accounting Periods and Methods. File amended tax return online First-time filer. File amended tax return online   If you have never filed an income tax return, you can adopt either a calendar tax year or a fiscal tax year. File amended tax return online You adopt a tax year by filing your first income tax return using that tax year. File amended tax return online You have not adopted a tax year if you merely did any of the following. File amended tax return online Filed an application for an extension of time to file an income tax return. File amended tax return online Filed an application for an employer identification number. File amended tax return online Paid estimated taxes for that tax year. File amended tax return online Changing your tax year. File amended tax return online   Once you have adopted your tax year, you may have to get IRS approval to change it. File amended tax return online To get approval, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year. File amended tax return online You may have to pay a fee. File amended tax return online For more information, see Publication 538. File amended tax return online Accounting Method An accounting method is a set of rules used to determine when and how income and expenses are reported. File amended tax return online You choose an accounting method for your business when you file your first income tax return. File amended tax return online There are two basic accounting methods. File amended tax return online Cash method. File amended tax return online Under the cash method, you report income in the tax year you receive it. File amended tax return online You usually deduct or capitalize expenses in the tax year you pay them. File amended tax return online Accrual method. File amended tax return online Under an accrual method, you generally report income in the tax year you earn it, even though you may receive payment in a later year. File amended tax return online You deduct or capitalize expenses in the tax year you incur them, whether or not you pay them that year. File amended tax return online For other methods, see Publication 538. File amended tax return online If you need inventories to show income correctly, you must generally use an accrual method of accounting for purchases and sales. File amended tax return online Inventories include goods held for sale in the normal course of business. File amended tax return online They also include raw materials and supplies that will physically become a part of merchandise intended for sale. File amended tax return online Inventories are explained in Publication 538. File amended tax return online Certain small business taxpayers can use the cash method of accounting and can also account for inventoriable items as materials and supplies that are not incidental. File amended tax return online For more information, see Publication 538. File amended tax return online You must use the same accounting method to figure your taxable income and to keep your books. File amended tax return online Also, you must use an accounting method that clearly shows your income. File amended tax return online In general, any accounting method that consistently uses accounting principles suitable for your trade or business clearly shows income. File amended tax return online An accounting method clearly shows income only if it treats all items of gross income and expense the same from year to year. File amended tax return online More than one business. File amended tax return online   When you own more than one business, you can use a different accounting method for each business if the method you use for each clearly shows your income. File amended tax return online You must keep a complete and separate set of books and records for each business. File amended tax return online Changing your method of accounting. File amended tax return online   Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. File amended tax return online A change in accounting method not only includes a change in your overall system of accounting, but also a change in the treatment of any material item. File amended tax return online For examples of changes that require approval and information on how to get approval for the change, see Publication 538. File amended tax return online Business Taxes The form of business you operate determines what taxes you must pay and how you pay them. File amended tax return online The following are the four general kinds of business taxes. File amended tax return online Income tax. File amended tax return online Self-employment tax. File amended tax return online Employment taxes. File amended tax return online Excise taxes. File amended tax return online See Table 2 for the forms you file to report these taxes. File amended tax return online You may want to get Publication 509. File amended tax return online It has tax calendars that tell you when to file returns and make tax payments. File amended tax return online Income Tax All businesses except partnerships must file an annual income tax return. File amended tax return online Partnerships file an information return. File amended tax return online Which form you use depends on how your business is organized. File amended tax return online See Table 2 to find out which return you have to file. File amended tax return online The federal income tax is a pay-as-you-go tax. File amended tax return online You must pay the tax as you earn or receive income during the year. File amended tax return online An employee usually has income tax withheld from his or her pay. File amended tax return online If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. File amended tax return online If you are not required to make estimated tax payments, you may pay any tax due when you file your return. File amended tax return online Table 2. File amended tax return online Which Forms Must I File? IF you are a. File amended tax return online . File amended tax return online . File amended tax return online   THEN you may be liable for. File amended tax return online . File amended tax return online . File amended tax return online   Use Form. File amended tax return online . File amended tax return online . File amended tax return online Sole proprietor   Income tax   1040 and Schedule C 1 or C-EZ (Schedule F 1 for farm business)     Self-employment tax   1040 and Schedule SE     Estimated tax   1040-ES     Employment taxes:         • Social security and Medicare   taxes and income tax   withholding   941 or 944 (943 for farm employees)     • Federal unemployment (FUTA)   tax   940     Excise taxes   See Excise Taxes Partnership   Annual return of income   1065     Employment taxes   Same as sole proprietor     Excise taxes   See Excise Taxes Partner in a partnership (individual)   Income tax   1040 and Schedule E 2     Self-employment tax   1040 and Schedule SE     Estimated tax   1040-ES Corporation or S corporation   Income tax   1120 (corporation) 2  1120S (S corporation) 2     Estimated tax   1120-W (corporation only)     Employment taxes   Same as sole proprietor     Excise taxes   See Excise Taxes S corporation shareholder   Income tax   1040 and Schedule E 2     Estimated tax   1040-ES 1 File a separate schedule for each business. File amended tax return online 2 Various other schedules may be needed. File amended tax return online Estimated tax. File amended tax return online   Generally, you must pay taxes on income, including self-employment tax (discussed next), by making regular payments of estimated tax during the year. File amended tax return online Sole proprietors, partners, and S corporation shareholders. File amended tax return online   You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. File amended tax return online Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. File amended tax return online For more information, see Publication 505, Tax Withholding and Estimated Tax. File amended tax return online Corporations. File amended tax return online   You generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return. File amended tax return online Use Form 1120-W, Estimated Tax for Corporations, to figure the estimated tax. File amended tax return online You must deposit the payments as explained later under Depositing Taxes. File amended tax return online For more information, see Publication 542. File amended tax return online Self-Employment Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. File amended tax return online Your payments of SE tax contribute to your coverage under the social security system. File amended tax return online Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. File amended tax return online You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. File amended tax return online Your net earnings from self-employment were $400 or more. File amended tax return online You had church employee income of $108. File amended tax return online 28 or more. File amended tax return online Use Schedule SE (Form 1040) to figure your SE tax. File amended tax return online For more information, see Publication 334, Tax Guide for Small Business. File amended tax return online You can deduct a portion of your SE tax as an adjustment to income on your Form 1040. File amended tax return online The Social Security Administration (SSA) time limit for posting self-employment income. File amended tax return online   Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. File amended tax return online If you file your tax return or report a change in your self-employment income after this time limit, the SSA may change its records, but only to remove or reduce the amount. File amended tax return online The SSA will not change its records to increase your self-employment income. File amended tax return online Employment Taxes This section briefly discusses the employment taxes you must pay, the forms you must file to report them, and other forms that must be filed when you have employees. File amended tax return online Employment taxes include the following. File amended tax return online Social security and Medicare taxes. File amended tax return online Federal income tax withholding. File amended tax return online Federal unemployment (FUTA) tax. File amended tax return online If you have employees, you will need to get Publication 15, Circular E, Employer's Tax Guide. File amended tax return online If you have agricultural employees, get Publication 51, Circular A, Agricultural Employer's Tax Guide. File amended tax return online These publications explain your tax responsibilities as an employer. File amended tax return online If you are not sure whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. File amended tax return online That publication has information to help you determine whether an individual is an employee or an independent contractor. File amended tax return online If you classify an employee as an independent contractor, you can be held liable for employment taxes for that worker plus a penalty. File amended tax return online An independent contractor is someone who is self-employed. File amended tax return online Generally, you do not have to withhold or pay any taxes on payments to an independent contractor. File amended tax return online Federal Income, Social Security, and Medicare Taxes You generally must withhold federal income tax from your employee's wages. File amended tax return online To figure how much federal income tax to withhold from each wage payment, use the employee's Form W-4 (discussed later under Hiring Employees) and the methods described in Publication 15. File amended tax return online Social security and Medicare taxes pay for benefits that workers and their families receive under the Federal Insurance Contributions Act (FICA). File amended tax return online Social security tax pays for benefits under the old-age, survivors, and disability insurance part of FICA. File amended tax return online Medicare tax pays for benefits under the hospital insurance part of FICA. File amended tax return online You withhold part of these taxes from your employee's wages and you pay a part yourself. File amended tax return online To find out how much social security and Medicare tax to withhold and to pay, see Publication 15. File amended tax return online Which form do I file?   Report these taxes on Form 941, Employer's QUARTERLY Federal Tax Return, or Form 944, Employer's ANNUAL Federal Tax Return. File amended tax return online (Farm employers use Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. File amended tax return online ) Federal Unemployment (FUTA) Tax The federal unemployment tax is part of the federal and state program under the Federal Unemployment Tax Act (FUTA) that pays unemployment compensation to workers who lose their jobs. File amended tax return online You report and pay FUTA tax separately from social security and Medicare taxes and withheld income tax. File amended tax return online You pay FUTA tax only from your own funds. File amended tax return online Employees do not pay this tax or have it withheld from their pay. File amended tax return online Which form do I file?   Report federal unemployment tax on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. File amended tax return online See Publication 15 to find out if you can use this form. File amended tax return online Hiring Employees Have the employees you hire fill out Form I-9 and Form W-4. File amended tax return online Form I-9. File amended tax return online   You must verify that each new employee is legally eligible to work in the United States. File amended tax return online Both you and the employee must complete the U. File amended tax return online S. File amended tax return online Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. File amended tax return online You can get the form from USCIS offices or from the USCIS website at www. File amended tax return online uscis. File amended tax return online gov. File amended tax return online Call the USCIS at 1-800-375-5283 for more information about your responsibilities. File amended tax return online Form W-4. File amended tax return online   Each employee must fill out Form W-4, Employee's Withholding Allowance Certificate. File amended tax return online You will use the filing status and withholding allowances shown on this form to figure the amount of income tax to withhold from your employee's wages. File amended tax return online For more information, see Publication 15. File amended tax return online Employees claiming more than 10 withholding allowances. File amended tax return online   An employer of an employee who claims more than 10 withholding allowances for wages paid can use several methods of withholding. File amended tax return online See section 16 of Publication 15. File amended tax return online Form W-2 Wage Reporting After the calendar year is over, you must furnish copies of Form W-2, Wage and Tax Statement, to each employee to whom you paid wages during the year. File amended tax return online You must also send copies to the Social Security Administration. File amended tax return online See Information Returns, later, for more information on Form W-2. File amended tax return online Excise Taxes This section describes the excise taxes you may have to pay and the forms you have to file if you do any of the following. File amended tax return online Manufacture or sell certain products. File amended tax return online Operate certain kinds of businesses. File amended tax return online Use various kinds of equipment, facilities, or products. File amended tax return online Receive payment for certain services. File amended tax return online For more information on excise taxes, see Publication 510, Excise Taxes. File amended tax return online Form 720. File amended tax return online   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. File amended tax return online Environmental taxes. File amended tax return online Communications and air transportation taxes. File amended tax return online Fuel taxes. File amended tax return online Tax on the first retail sale of heavy trucks, trailers, and tractors. File amended tax return online Manufacturers taxes on the sale or use of a variety of different articles. File amended tax return online Form 2290. File amended tax return online   There is a federal excise tax on certain trucks, truck tractors, and buses used on public highways. File amended tax return online The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. File amended tax return online Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. File amended tax return online For more information, see the instructions for Form 2290. File amended tax return online Form 730. File amended tax return online   If you are in the business of accepting wagers or conducting a wagering pool or lottery, you may be liable for the federal excise tax on wagering. File amended tax return online Use Form 730, Monthly Tax Return for Wagers, to figure the tax on the wagers you receive. File amended tax return online Form 11-C. File amended tax return online   Use Form 11-C, Occupational Tax and Registration Return for Wagering, to register for any wagering activity and to pay the federal occupational tax on wagering. File amended tax return online Depositing Taxes You generally have to deposit employment taxes, certain excise taxes, corporate income tax, and S corporation taxes before you file your return. File amended tax return online Generally, taxpayers are required to deposit taxes through the Electronic Federal Tax Payment System (EFTPS). File amended tax return online Any business that has a federal tax obligation and requests a new EIN will automatically be enrolled in EFTPS. File amended tax return online Through the mail, the business will receive an EFTPS PIN package that contains instructions for activating its EFTPS enrollment. File amended tax return online Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. File amended tax return online The IRS compares the payments shown on the information returns with each person's income tax return to see if the payments were included in income. File amended tax return online You must give a copy of each information return you are required to file to the recipient or payer. File amended tax return online In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. File amended tax return online For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. File amended tax return online Form 1099-MISC. File amended tax return online   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your trade or business. File amended tax return online These payments include the following items. File amended tax return online Payments of $600 or more for services performed for your business by people not treated as your employees, such as subcontractors, attorneys, accountants, or directors. File amended tax return online Rent payments of $600 or more, other than rents paid to real estate agents. File amended tax return online Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. File amended tax return online Royalty payments of $10 or more. File amended tax return online Payments to certain crew members by operators of fishing boats. File amended tax return online You also use Form 1099-MISC to report your sales of $5,000 or more of consumer goods to a person for resale anywhere other than in a permanent retail establishment. File amended tax return online Form W-2. File amended tax return online   You must file Form W-2, Wage and Tax Statement, to report payments to your employees, such as wages, tips, and other compensation, withheld income, social security, and Medicare taxes. File amended tax return online For more information on what to report on Form W-2, see the Instructions for Forms W-2 and W-3. File amended tax return online Form 8300. File amended tax return online   You must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction or two or more related business transactions. File amended tax return online Cash includes U. File amended tax return online S. File amended tax return online and foreign coin and currency. File amended tax return online It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. File amended tax return online For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). File amended tax return online Penalties The law provides penalties for not filing returns or paying taxes as required. File amended tax return online Criminal penalties may be imposed for willful failure to file, tax evasion, or making a false statement. File amended tax return online Failure to file tax returns. File amended tax return online   If you do not file your tax return by the due date, you may have to pay a penalty. File amended tax return online The penalty is based on the tax not paid by the due date. File amended tax return online See your tax return instructions for more information about this penalty. File amended tax return online Failure to pay tax. File amended tax return online   If you do not pay your taxes by the due date, you will have to pay a penalty for each month, or part of a month, that your taxes are not paid. File amended tax return online For more information, see your tax return instructions. File amended tax return online Failure to withhold, deposit, or pay taxes. File amended tax return online   If you do not withhold income, social security, or Medicare taxes from employees, or if you withhold taxes but do not deposit them or pay them to the IRS, you may be subject to a penalty of the unpaid tax, plus interest. File amended tax return online You may also be subject to penalties if you deposit the taxes late. File amended tax return online For more information, see Publication 15. File amended tax return online Failure to follow information reporting requirements. File amended tax return online   The following penalties apply if you are required to file information returns. File amended tax return online For more information, see the General Instructions for Certain Information Returns. File amended tax return online Failure to file information returns. File amended tax return online A penalty applies if you do not file information returns by the due date, if you do not include all required information, or if you report incorrect information. File amended tax return online Failure to furnish correct payee statements. File amended tax return online A penalty applies if you do not furnish a required statement to a payee by the due date, if you do not include all required information, or if you report incorrect information. File amended tax return online Waiver of penalty. File amended tax return online   These penalties will not apply if you can show that the failures were due to reasonable cause and not willful neglect. File amended tax return online   In addition, there is no penalty for failure to include all the required information, or for including incorrect information, on a de minimis number of information returns if you correct the errors by August 1 of the year the returns are due. File amended tax return online (To be considered de minimis, the number of returns cannot exceed the greater of 10 or ½ of 1% of the total number of returns you are required to file for the year. File amended tax return online ) Failure to supply taxpayer identification number. File amended tax return online   If you do not include your taxpayer identification number (SSN or EIN) or the taxpayer identification number of another person where required on a return, statement, or other document, you may be subject to a penalty of $50 for each failure. File amended tax return online You may also be subject to the $50 penalty if you do not give your taxpayer identification number to another person when it is required on a return, statement, or other document. File amended tax return online Business Expenses You can deduct business expenses on your income tax return. File amended tax return online These are the current operating costs of running your business. File amended tax return online To be deductible, a business expense must be both ordinary and necessary. File amended tax return online An ordinary expense is one that is common and accepted in your field of business, trade, or profession. File amended tax return online A necessary expense is one that is helpful and appropriate for your business, trade, or profession. File amended tax return online An expense does not have to be indispensable to be considered necessary. File amended tax return online The following are brief explanations of some expenses that are of interest to people starting a business. File amended tax return online There are many other expenses that you may be able to deduct. File amended tax return online See your form instructions and Publication 535, Business Expenses. File amended tax return online Business Start-Up Costs Business start-up costs are the expenses you incur before you actually begin business operations. File amended tax return online Your business start-up costs will depend on the type of business you are starting. File amended tax return online They may include costs for advertising, travel, surveys, and training. File amended tax return online These costs are generally capital expenses. File amended tax return online You usually recover costs for a particular asset (such as machinery or office equipment) through depreciation (discussed next). File amended tax return online You can elect to deduct up to $5,000 of business start-up costs and $5,000 of organizational costs paid or incurred after October 22, 2004. File amended tax return online The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. File amended tax return online Any remaining cost must be amortized. File amended tax return online For more information about amortizing start-up and organizational costs, see chapter 7 in Publication 535. File amended tax return online Depreciation If property you acquire to use in your business has a useful life that extends substantially beyond the year it is placed in service, you generally cannot deduct the entire cost as a business expense in the year you acquire it. File amended tax return online You must spread the cost over more than one tax year and deduct part of it each year. File amended tax return online This method of deducting the cost of business property is called depreciation. File amended tax return online Business property you must depreciate includes the following items. File amended tax return online Office furniture. File amended tax return online Buildings. File amended tax return online Machinery and equipment. File amended tax return online You can choose to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. File amended tax return online This deduction is known as the “section 179 deduction. File amended tax return online ” For more information about depreciation and the section 179 deduction, see Publication 946, How To Depreciate Property. File amended tax return online Depreciation must be taken in the year it is allowable. File amended tax return online Allowable depreciation not taken in a prior year cannot be taken in the current year. File amended tax return online If you do not deduct the correct depreciation, you may be able to make a correction by filing Form 1040X, Amended U. File amended tax return online S. File amended tax return online Individual Income Tax Return, or by changing your accounting method. File amended tax return online For more information on how to correct depreciation deductions, see chapter 1 in Publication 946. File amended tax return online Business Use of Your Home To deduct expenses related to the business use of part of your home, you must meet specific requirements. File amended tax return online Even then, your deduction may be limited. File amended tax return online To qualify to claim expenses for business use of your home, you must meet both the following tests. File amended tax return online Your use of the business part of your home must be: Exclusive (however, see Exceptions to exclusive use, later), Regular, For your trade or business, AND The business part of your home must be one of the following: Your principal place of business (defined later), A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, or A separate structure (not attached to your home) you use in connection with your trade or business. File amended tax return online Exclusive use. File amended tax return online   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. File amended tax return online The area used for business can be a room or other separately identifiable space. File amended tax return online The space does not need to be marked off by a permanent partition. File amended tax return online   You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. File amended tax return online Exceptions to exclusive use. File amended tax return online   You do not have to meet the exclusive use test if either of the following applies. File amended tax return online You use part of your home for the storage of inventory or product samples. File amended tax return online You use part of your home as a daycare facility. File amended tax return online For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). File amended tax return online Principal place of business. File amended tax return online   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. File amended tax return online You use it exclusively and regularly for administrative or management activities of your trade or business. File amended tax return online You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. File amended tax return online   Alternatively, if you use your home exclusively and regularly for your business, but your home office does not qualify as your principal place of business based on the previous rules, you determine your principal place of business based on the following factors. File amended tax return online The relative importance of the activities performed at each location. File amended tax return online If the relative importance factor does not determine your principal place of business, the time spent at each location. File amended tax return online    If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. File amended tax return online However, for other ways to qualify to deduct home office expenses, see Publication 587. File amended tax return online Which form do I file?   If you file Schedule C (Form 1040), use Form 8829, Expenses for Business Use of Your Home, to figure your deduction. File amended tax return online If you file Schedule F (Form 1040) or you are a partner, you can use the worksheet in Publication 587. File amended tax return online More information. File amended tax return online   For more information about business use of your home, see Publication 587. File amended tax return online Car and Truck Expenses If you use your car or truck in your business, you can deduct the costs of operating and maintaining it. File amended tax return online You generally can deduct either your actual expenses or the standard mileage rate. File amended tax return online Actual expenses. File amended tax return online   If you deduct actual expenses, you can deduct the cost of the following items: Depreciation Lease payments Registration Garage rent Licenses Repairs Gas Oil Tires Insurance Parking fees Tolls   If you use your vehicle for both business and personal purposes, you must divide your expenses between business and personal use. File amended tax return online You can divide your expenses based on the miles driven for each purpose. File amended tax return online Example. File amended tax return online You are the sole proprietor of a flower shop. File amended tax return online You drove your van 20,000 miles during the year. File amended tax return online 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use. File amended tax return online You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. File amended tax return online Standard mileage rate. File amended tax return online   Instead of figuring actual expenses, you may be able to use the standard mileage rate to figure the deductible costs of operating your car, van, pickup, or panel truck for business purposes. File amended tax return online You can use the standard mileage rate for a vehicle you own or lease. File amended tax return online The standard mileage rate is a specified amount of money you can deduct for each business mile you drive. File amended tax return online It is announced annually by the IRS. File amended tax return online To figure your deduction, multiply your business miles by the standard mileage rate for the year. File amended tax return online    Generally, if you use the standard mileage rate, you cannot deduct your actual expenses. File amended tax return online However, you may be able to deduct business-related parking fees, tolls, interest on your car loan, and certain state and local taxes. File amended tax return online Choosing the standard mileage rate. File amended tax return online   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. File amended tax return online In later years, you can choose to use either the standard mileage rate or actual expenses. File amended tax return online   If you use the standard mileage rate for a car you lease, you must choose to use it for the entire lease period (including renewals). File amended tax return online Additional information. File amended tax return online   For more information about the rules for claiming car and truck expenses, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. File amended tax return online Recordkeeping This part explains why you must keep records, what kinds of records you must keep, and how to keep them. File amended tax return online It also explains how long you must keep your records for federal tax purposes. File amended tax return online A sample recordkeeping system is illustrated at the end of this part. File amended tax return online Why Keep Records? Everyone in business must keep records. File amended tax return online Good records will help you do the following. File amended tax return online Monitor the progress of your business. File amended tax return online   You need good records to monitor the progress of your business. File amended tax return online Records can show whether your business is improving, which items are selling, or what changes you need to make. File amended tax return online Good records can increase the likelihood of business success. File amended tax return online Prepare your financial statements. File amended tax return online   You need good records to prepare accurate financial statements. File amended tax return online These include income (profit and loss) statements and balance sheets. File amended tax return online These statements can help you in dealing with your bank or creditors and help you manage your business. File amended tax return online An income statement shows the income and expenses of the business for a given period of time. File amended tax return online A balance sheet shows the assets, liabilities, and your equity in the business on a given date. File amended tax return online Identify source of receipts. File amended tax return online   You will receive money or property from many sources. File amended tax return online Your records can identify the source of your receipts. File amended tax return online You need this information to separate business from nonbusiness receipts and taxable from nontaxable income. File amended tax return online Keep track of deductible expenses. File amended tax return online   You may forget expenses when you prepare your tax return unless you record them when they occur. File amended tax return online Prepare your tax returns. File amended tax return online   You need good records to prepare your tax returns. File amended tax return online These records must support the income, expenses, and credits you report. File amended tax return online Generally, these are the same records you use to monitor your business and prepare your financial statements. File amended tax return online Support items reported on tax returns. File amended tax return online   You must keep your business records available at all times for inspection by the IRS. File amended tax return online If the IRS examines any of your tax returns, you may be asked to explain the items reported. File amended tax return online A complete set of records will speed up the examination. File amended tax return online Kinds of Records To Keep Except in a few cases, the law does not require any specific kind of records. File amended tax return online You can choose any recordkeeping system suited to your business that clearly shows your income and expenses. File amended tax return online The business you are in affects the type of records you need to keep for federal tax purposes. File amended tax return online You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. File amended tax return online See Accounting Method, earlier. File amended tax return online If you are in more than one business, you should keep a complete and separate set of records for each business. File amended tax return online A corporation should keep minutes of board of directors' meetings. File amended tax return online Your recordkeeping system should include a summary of your business transactions. File amended tax return online This summary is ordinarily made in your books (for example, accounting journals and ledgers). File amended tax return online Your books must show your gross income, as well as your deductions and credits. File amended tax return online For most small businesses, the business checkbook (discussed later) is the main source for entries in the business books. File amended tax return online In addition, you must keep supporting documents, explained later. File amended tax return online Electronic records. File amended tax return online   All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. File amended tax return online When you replace hard copy books and records, you must maintain the electronic storage systems for as long as they are material to the administration of tax law. File amended tax return online An electronic storage system is any system for preparing or keeping your records either by electronic imaging or by transfer to an electronic storage media. File amended tax return online The electronic storage system must index, store, preserve, retrieve and reproduce the electronically stored books and records in legible format. File amended tax return online All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. File amended tax return online Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. File amended tax return online   The original hard copy books and records may be destroyed provided that the electronic storage system has been tested to establish that the hard copy books and records are being reproduced in compliance with IRS requirements for an electronic storage system and procedures are established to ensure continued compliance with all applicable rules and regulations. File amended tax return online You still have the responsibility of retaining any other books and records that are required to be retained. File amended tax return online   The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. File amended tax return online This test is not considered an examination and the results must be shared with you. File amended tax return online If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. File amended tax return online If not, you may be subject to penalties for non-compliance, unless you continue to maintain your original hard copy books and records in a manner that allows you and the IRS to determine your correct tax. File amended tax return online For details on electronic storage system requirements, see Revenue Procedure 97-22, available in Internal Revenue Bulletin 1997-13. File amended tax return online Supporting Documents Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. File amended tax return online Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks. File amended tax return online These documents contain information you need to record in your books. File amended tax return online It is important to keep these documents because they support the entries in your books and on your tax return. File amended tax return online Keep them in an orderly fashion and in a safe place. File amended tax return online For instance, organize them by year and type of income or expense. File amended tax return online Gross receipts. File amended tax return online   Gross receipts are the income you receive from your business. File amended tax return online You should keep supporting documents that show the amounts and sources of your gross receipts. File amended tax return online Documents that show gross receipts include the following. File amended tax return online Cash register tapes. File amended tax return online Bank deposit slips. File amended tax return online Receipt books. File amended tax return online Invoices. File amended tax return online Credit card charge slips. File amended tax return online Forms 1099-MISC. File amended tax return online Purchases. File amended tax return online   Purchases are the items you buy and resell to customers. File amended tax return online If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into finished products. File amended tax return online Your supporting documents should show the amount paid and that the amount was for purchases. File amended tax return online Documents for purchases include the following. File amended tax return online Canceled checks. File amended tax return online Cash register tape receipts. File amended tax return online Credit card sales slips. File amended tax return online Invoices. File amended tax return online These records will help you determine the value of your inventory at the end of the year. File amended tax return online See Publication 538 for information on methods for valuing inventory. File amended tax return online Expenses. File amended tax return online   Expenses are the costs you incur (other than purchases) to carry on your business. File amended tax return online Your supporting documents should show the amount paid and that the amount was for a business expense. File amended tax return online Documents for expenses include the following. File amended tax return online Canceled checks. File amended tax return online Cash register tapes. File amended tax return online Account statements. File amended tax return online Credit card sales slips. File amended tax return online Invoices. File amended tax return online Petty cash slips for small cash payments. File amended tax return online    A petty cash fund allows you to make small payments without having to write checks for small amounts. File amended tax return online Each time you make a payment from this fund, you should make out a petty cash slip and attach it to your receipt as proof of payment. File amended tax return online Travel, transportation, entertainment, and gift expenses. File amended tax return online   Specific recordkeeping rules apply to these expenses. File amended tax return online For more information, see Publication 463. File amended tax return online Employment taxes. File amended tax return online   There are specific employment tax records you must keep. File amended tax return online For a list, see Publication 15. File amended tax return online Assets. File amended tax return online   Assets are the property, such as machinery and furniture you own and use in your business. File amended tax return online You must keep records to verify certain information about your business assets. File amended tax return online You need records to figure the annual depreciation and the gain or loss when you sell the assets. File amended tax return online Your records should show the following information. File amended tax return online When and how you acquired the asset. File amended tax return online Purchase price. File amended tax return online Cost of any improvements. File amended tax return online Section 179 deduction taken. File amended tax return online Deductions taken for depreciation. File amended tax return online Deductions taken for casualty losses, such as losses resulting from fires or storms. File amended tax return online How you used the asset. File amended tax return online When and how you disposed of the asset. File amended tax return online Selling price. File amended tax return online Expenses of sale. File amended tax return online   The following documents may show this information. File amended tax return online Purchase and sales invoices. File amended tax return online Real estate closing statements. File amended tax return online Canceled checks. File amended tax return online What if I don't have a canceled check?   If you do not have a canceled check, you may be able to prove payment with certain financial account statements prepared by financial institutions. File amended tax return online These include account statements prepared for the financial institution by a third party. File amended tax return online These account statements must be highly legible. File amended tax return online The following table lists acceptable account statements. File amended tax return online  IF payment is by. File amended tax return online . File amended tax return online . File amended tax return online THEN the statement must show the. File amended tax return online . File amended tax return online . File amended tax return online Check Check number. File amended tax return online Amount. File amended tax return online Payee's name. File amended tax return online Date the check amount was posted to the account by the financial institution. File amended tax return online Electronic funds transfer Amount transferred. File amended tax return online Payee's name. File amended tax return online Date the transfer was posted to the account by the financial institution. File amended tax return online Credit card Amount charged. File amended tax return online Payee's name. File amended tax return online Transaction date. File amended tax return online    Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. File amended tax return online You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost. File amended tax return online Recording Business Transactions A good recordkeeping system includes a summary of your business transactions. File amended tax return online (Your business transactions are shown on the supporting documents just discussed. File amended tax return online ) Business transactions are ordinarily summarized in books called journals and ledgers. File amended tax return online You can buy them at your local stationery or office supply store. File amended tax return online A journal is a book where you record each business transaction shown on your supporting documents. File amended tax return online You may have to keep separate journals for transactions that occur frequently. File amended tax return online A ledger is a book that contains the totals from all of your journals. File amended tax return online It is organized into different accounts. File amended tax return online Whether you keep journals and ledgers and how you keep them depends on the type of business you are in. File amended tax return online For example, a recordkeeping system for a small business might include the following items. File amended tax return online Business checkbook. File amended tax return online Daily summary of cash receipts. File amended tax return online Monthly summary of cash receipts. File amended tax return online Check disbursements journal. File amended tax return online Depreciation worksheet. File amended tax return online Employee compensation record. File amended tax return online The business checkbook is explained next. File amended tax return online The other items are illustrated later under Sample Record System. File amended tax return online The system you use to record business transactions will be more effective if you follow good recordkeeping practices. File amended tax return online For example, record expenses when they occur, and identify the source of recorded receipts. File amended tax return online Generally, it is best to record transactions on a daily basis. File amended tax return online Business checkbook. File amended tax return online   One of the first things you should do when you start a business is open a business checking account. File amended tax return online You should keep your business account separate from your personal checking account. File amended tax return online   The business checkbook is your basic source of information for recording your business expenses. File amended tax return online You should deposit all daily receipts in your business checking account. File amended tax return online You should check your account for errors by reconciling it. File amended tax return online See Reconciling the checking account, later. File amended tax return online   Consider using a checkbook that allows enough space to identify the source of deposits as business income, personal funds, or loans. File amended tax return online You should also note on the deposit slip the source of the deposit and keep copies of all slips. File amended tax return online   You should make all payments by check to document business expenses. File amended tax return online Write checks payable to yourself only when making withdrawals from your business for personal use. File amended tax return online Avoid writing checks payable to cash. File amended tax return online If you must write a check for cash to pay a business expense, include the receipt for the cash payment in your records. File amended tax return online If you cannot get a receipt for a cash payment, you should make an adequate explanation in your records at the time of payment. File amended tax return online    Use the business account for business purposes only. File amended tax return online Indicate the source of deposits and the type of expense in the checkbook. File amended tax return online Reconciling the checking account. File amended tax return online   When you receive your bank statement, make sure the statement, your checkbook, and your books agree. File amended tax return online The statement balance may not agree with the balance in your checkbook and books if the statement: Includes bank charges you did not enter in your books and subtract from your checkbook balance, or Does not include deposits made after the statement date or checks that did not clear your account before the statement date. File amended tax return online   By reconciling your checking account, you will: Verify how much money you have in the account, Make sure that your checkbook and books reflect all bank charges and the correct balance in the checking account, and Correct any errors in your bank statement, checkbook, and books. File amended tax return online    You should reconcile your checking account each month. File amended tax return online     Before you reconcile your monthly bank statement, check your own figures. File amended tax return online Begin with the balance shown in your checkbook at the end of the previous month. File amended tax return online To this balance, add the total cash deposited during the month and subtract the total cash disbursements. File amended tax return online   After checking your figures, the result should agree with your checkbook balance at the end of the month. File amended tax return online If the result does not agree, you may have made an error in recording a check or deposit. File amended tax return online You can find the error by doing the following. File amended tax return online Adding the amounts on your check stubs and comparing that total with the total in the “amount of check” column in your check disbursements journal. File amended tax return online If the totals do not agree, check the individual amounts to see if an error was made in your check stub record or in the related entry in your check disbursements journal. File amended tax return online Adding the deposit amounts in your checkbook. File amended tax return online Compare that total with the monthly total in your cash receipt book, if you have one. File amended tax return online If the totals do not agree, check the individual amounts to find any errors. File amended tax return online   If your checkbook and journal entries still disagree, then refigure the running balance in your checkbook to make sure additions and subtractions are correct. File amended tax return online   When your checkbook balance agrees with the balance figured from the journal entries, you may begin reconciling your checkbook with the bank statement. File amended tax return online Many banks print a reconciliation worksheet on the back of the statement. File amended tax return online   To reconcile your account, follow these steps. File amended tax return online Compare the deposits listed on the bank statement with the deposits shown in your checkbook. File amended tax return online Note all differences in the dollar amounts. File amended tax return online Compare each canceled check, including both check number and dollar amount, with the entry in your checkbook. File amended tax return online Note all differences in the dollar amounts. File amended tax return online Mark the check number in the checkbook as having cleared the bank. File amended tax return online After accounting for all checks returned by the bank, those not marked in your checkbook are your outstanding checks. File amended tax return online Prepare a bank reconciliation. File amended tax return online One is illustrated later under Sample Record System. File amended tax return online Update your checkbook and journals for items shown on the reconciliation as not recorded (such as service charges) or recorded incorrectly. File amended tax return online At this point, the adjusted bank statement balance should equal your adjusted checkbook balance. File amended tax return online If you still have differences, check the previous steps to find the errors. File amended tax return online   Table 3. File amended tax return online Period of Limitations IF you. File amended tax return online . File amended tax return online . File amended tax return online   THEN the period is. File amended tax return online . File amended tax return online . File amended tax return online 1. File amended tax return online Owe additional tax and situations (2), (3), and (4), below, do not apply to you   3 years 2. File amended tax return online Do not report income that you should report and it is more than 25% of the gross income shown on the return   6 years 3. File amended tax return online File a fraudulent return   Not limited 4. File amended tax return online Do not file a return   Not limited 5. File amended tax return online File a claim for credit or refund after you filed your return   Later of: 3 years or  2 years after tax   was paid 6. File amended tax return online File a claim for a loss from worthless securities or a bad debt deduction   7 years Bookkeeping System You must decide whether to use a single-entry or a double-entry bookkeeping system. File amended tax return online The single-entry system of bookkeeping is the simplest to maintain, but it may not be suitable for everyone. File amended tax return online You may find the double-entry system better because it has built-in checks and balances to assure accuracy and control. File amended tax return online Single-entry. File amended tax return online   A single-entry system is based on the income statement (profit or loss statement). File amended tax return online It can be a simple and practical system if you are starting a small business. File amended tax return online The system records the flow of income and expenses through the use of: A daily summary of cash receipts, and Monthly summaries of cash receipts and disbursements. File amended tax return online Double-entry. File amended tax return online   A double-entry bookkeeping system uses journals and ledgers. File amended tax return online Transactions are first entered in a journal and then posted to ledger accounts. File amended tax return online These accounts show income, expenses, assets (property a business owns), liabilities (debts of a business), and net worth (excess of assets over liabilities). File amended tax return online You close income and expense accounts at the end of each tax year. File amended tax return online You keep asset, liability, and net worth accounts open on a permanent basis. File amended tax return online   In the double-entry system, each account has a left side for debits and a right side for credits. File amended tax return online It is self-balancing because you record every transaction as a debit entry in one account and as a credit entry in another. File amended tax return online   Under this system, the total debits must equal the total credits after you post the journal entries to the ledger accounts. File amended tax return online If the amounts do not balance, you have made an error and you must find and correct it. File amended tax return online   An example of a journal entry exhibiting a payment of rent in October is shown next. File amended tax return online General Journal Date Description of Entry Debit  Credit Oct. File amended tax return online 5 Rent expense 780. File amended tax return online 00     Cash   780. File amended tax return online 00                 Computerized System There are computer software packages you can use for recordkeeping. File amended tax return online They can be purchased in many retail stores. File amended tax return online These packages are very helpful and relatively easy to use; they require very little knowledge of bookkeeping and accounting. File amended tax return online If you use a computerized system, you must be able to produce sufficient legible records to support and verify entries made on your return and determine your correct tax liability. File amended tax return online To meet this qualification, the machine-sensible records must reconcile with your books and return. File amended tax return online These records must provide enough detail to identify the underlying source documents. File amended tax return online You must also keep all machine-sensible records and a complete description of the computerized portion of your recordkeeping system. File amended tax return online This documentation must be sufficiently detailed to show all of the following items. File amended tax return online Functions being performed as the data flows through the system. File amended tax return online Controls used to ensure accurate and reliable processing. File amended tax return online Controls used to prevent the unauthorized addition, alteration, or deletion of retained records. File amended tax return online Charts of accounts and detailed account descriptions. File amended tax return online See Revenue Procedure 98-25 in Cumulative Bulletin 1998-1 for more information. File amended tax return online How Long To Keep Records You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. File amended tax return online Generally, this means you must keep records that support an item of income or deduction on a return until the period of limitations for that return runs out. File amended tax return online The period of limitations is the period of time in which you can amend your return to claim a credit or refund, or the IRS can assess additional tax. File amended tax return online Table 3 contains the periods of limitations that apply to income tax returns. File amended tax return online Unless otherwise stated, the years refer to the period after the return was filed. File amended tax return online Returns filed before the due date are treated as filed on the due date. File amended tax return online Keep copies of your filed tax returns. File amended tax return online They help in preparing future tax returns and making computations if you file an amended return. File amended tax return online Employment taxes. File amended tax return online   If you have employees, you must keep all employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later. File amended tax return online For more information about recordkeeping for employment taxes, see Publication 15. File amended tax return online Assets. File amended tax return online   Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. File amended tax return online You must keep these records to figure any depreciation, amortization, or depletion deduction, and to figure your basis for computing gain or loss when you sell or otherwise dispose of the property. File amended tax return online   Generally, if you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. File amended tax return online You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition. File amended tax return online Records for nontax purposes. File amended tax return online   When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. File amended tax return online For example, your insurance company or creditors may require you to keep them longer than the IRS does. File amended tax return online Sample Record System This example illustrates a single-entry system used by Henry Brown, who is the sole proprietor of a small automobile body shop. File amended tax return online Henry uses part-time help, has no inventory of items held for sale, and uses the cash method of accounting. File amended tax return online These sample records should not be viewed as a recommendation of how to keep your records. File amended tax return online They are intended only to show how one business keeps its records. File amended tax return online 1. File amended tax return online Daily Summary of Cash Receipts This summary is a record of cash sales for the day. File amended tax return online It accounts for cash at the end of the day over the amount in the Change and Petty Cash Fund at the beginning of the day. File amended tax return online Henry takes the cash sales entry from his cash register tape. File amended tax return online If he had no cash register, he would simply total his cash sale slips and any other cash received that day. File amended tax return online He carries the total receipts shown in this summary for January 3 ($267. File amended tax return online 80), including cash sales ($263. File amended tax return online 60) and sales tax ($4. File amended tax return online 20), to the Monthly Summary of Cash Receipts. File amended tax return online Petty cash fund. File amended tax return online   Henry uses a petty cash fund to make small payments without having to write checks for small amounts. File amended tax return online Each time he makes a payment from this fund, he makes out a petty cash slip and attaches it to his receipt as proof of payment. File amended tax return online He sets up a fixed amount ($50) in his petty cash fund. File amended tax return online The total of the unspent petty cash and the amounts on the petty cash slips should equal the fixed amount of the fund. File amended tax return online When the totals on the petty cash slips approach the fixed amount, he brings the cash in the fund back to the fixed amount by writing a check to “Petty Cash” for the total of the outstanding slips. File amended tax return online (See the Check Disbursements Journal entry for check number 92. File amended tax return online ) This restores the fund to its fixed amount of $50. File amended tax return online He then summarizes the slips and enters them in the proper columns in the monthly check disbursements journal. File amended tax return online 2. File amended tax return online Monthly Summary of Cash Receipts This shows the income activity for the month. File amended tax return online Henry carries the total monthly net sales shown in this summary for January ($4,865. File amended tax return online 05) to his Annual Summary. File amended tax return online To figure total monthly net sales, Henry reduces the total monthly receipts by the sales tax imposed on his customers and turned over to the state. File amended tax return online He cannot take a deduction for sales tax turned over to the state because he only collected the tax. File amended tax return online He does not include the tax in his income. File amended tax return online 3. File amended tax return online Check Disbursements Journal Henry enters checks drawn on the business checking account in the Check Disbursements Journal each day. File amended tax return online All checks are prenumbered and each check number is listed and accounted for in the column provided in the journal. File amended tax return online Frequent expenses have their own headings across the sheet. File amended tax return online He enters in a separate column expenses that require comparatively numerous or large payments each month, such as materials, gross payroll, and rent. File amended tax return online Under the General Accounts column, he enters small expenses that normally have only one or two monthly payments, such as licenses and postage. File amended tax return online Henry does not pay personal or nonbusiness expenses by checks drawn on the business account. File amended tax return online If he did, he would record them in the journal, even though he could not deduct them as business expenses. File amended tax return online Henry carries the January total of expenses for materials ($1,083. File amended tax return online 50) to the Annual Summary. File amended tax return online Similarly, he enters the monthly total of expenses for telephone, truck/auto, etc. File amended tax return online , in the appropriate columns of that summary. File amended tax return online 4. File amended tax return online Employee Compensation Record This record shows the following information. File amended tax return online The number of hours Henry's employee worked in a pay period. File amended tax return online The employee's total pay for the period. File amended tax return online The deductions Henry withheld in figuring the employee's net pay. File amended tax return online The monthly gross payroll. File amended tax return online Henry carries the January gross payroll ($520) to the Annual Summary. File amended tax return online 5. File amended tax return online Annual Summary This annual summary of monthly cash receipts and expense totals provides the final amounts to enter on Henry's tax return. File amended tax return online He figures the cash receipts total from the total of monthly cash receipts shown in the Monthly Summary of Cash Receipts. File amended tax return online He figures the expense totals from the totals of monthly expense items shown in the Check Disbursements Journal. File amended tax return online As in the journal, he keeps each major expense in a separate column. File amended tax return online Henry carries the cash receipts total shown in the annual summary ($47,440. File amended tax return online 9