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Can you e file 2012 taxes now Publication 583 - Main Content Table of Contents What New Business Owners Need To Know Forms of BusinessMore information. Can you e file 2012 taxes now More information. Can you e file 2012 taxes now Exception—Community Income. Can you e file 2012 taxes now Exception—Qualified joint venture. Can you e file 2012 taxes now More information. Can you e file 2012 taxes now More information. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Table 1 can help you learn what those responsibilities are. Can you e file 2012 taxes now Ask yourself each question listed in the table, then see the related discussion to find the answer. Can you e file 2012 taxes now In addition to knowing about federal taxes, you need to make some basic business decisions. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now For information on how to contact the SBA, see How to Get More Information, later. Can you e file 2012 taxes now Forms of Business The most common forms of business are the sole proprietorship, partnership, and corporation. Can you e file 2012 taxes now When beginning a business, you must decide which form of business to use. Can you e file 2012 taxes now Legal and tax considerations enter into this decision. Can you e file 2012 taxes now Only tax considerations are discussed in this publication. Can you e file 2012 taxes now Your form of business determines which income tax return form you have to file. Can you e file 2012 taxes now See Table 2 to find out which form you have to file. Can you e file 2012 taxes now Sole proprietorships. Can you e file 2012 taxes now   A sole proprietorship is an unincorporated business that is owned by one individual. Can you e file 2012 taxes now It is the simplest form of business organization to start and maintain. Can you e file 2012 taxes now The business has no existence apart from you, the owner. Can you e file 2012 taxes now Its liabilities are your personal liabilities. Can you e file 2012 taxes now You undertake the risks of the business for all assets owned, whether or not used in the business. Can you e file 2012 taxes now You include the income and expenses of the business on your personal tax return. Can you e file 2012 taxes now More information. Can you e file 2012 taxes now   For more information on sole proprietorships, see Publication 334, Tax Guide for Small Business. Can you e file 2012 taxes now If you are a farmer, see Publication 225, Farmer's Tax Guide. Can you e file 2012 taxes now Partnerships. Can you e file 2012 taxes now   A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Can you e file 2012 taxes now Each person contributes money, property, labor, or skill, and expects to share in the profits and losses of the business. Can you e file 2012 taxes now   A partnership must file an annual information return to report the income, deductions, gains, losses, etc. Can you e file 2012 taxes now , from its operations, but it does not pay income tax. Can you e file 2012 taxes now Instead, it “passes through” any profits or losses to its partners. Can you e file 2012 taxes now Each partner includes his or her share of the partnership's items on his or her tax return. Can you e file 2012 taxes now More information. Can you e file 2012 taxes now   For more information on partnerships, see Publication 541, Partnerships. Can you e file 2012 taxes now Husband and wife business. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now Do not use Schedule C or C-EZ. Can you e file 2012 taxes now Instead, file Form 1065, U. Can you e file 2012 taxes now S. Can you e file 2012 taxes now Return of Partnership Income. Can you e file 2012 taxes now For more information, see Publication 541, Partnerships. Can you e file 2012 taxes now Exception—Community Income. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now S. Can you e file 2012 taxes now possession, you can treat the business either as a sole proprietorship or a partnership. Can you e file 2012 taxes now The only states with community property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Can you e file 2012 taxes now A change in your reporting position will be treated as a conversion of the entity. Can you e file 2012 taxes now Exception—Qualified joint venture. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now For an explanation of "material participation," see the Instructions for Schedule C, line G. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now Each of you must file a separate Schedule C or C-EZ and a separate Schedule SE. Can you e file 2012 taxes now For more information, see Qualified Joint Venture in the Instructions for Schedule SE. Can you e file 2012 taxes now Corporations. Can you e file 2012 taxes now   In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. Can you e file 2012 taxes now A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. Can you e file 2012 taxes now A corporation can also take special deductions. Can you e file 2012 taxes now   The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. Can you e file 2012 taxes now However, shareholders cannot deduct any loss of the corporation. Can you e file 2012 taxes now More information. Can you e file 2012 taxes now   For more information on corporations, see Publication 542, Corporations. Can you e file 2012 taxes now S corporations. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now More information. Can you e file 2012 taxes now   For more information on S corporations, see the instructions for Form 2553, Election by a Small Business Corporation, and Form 1120S, U. Can you e file 2012 taxes now S. Can you e file 2012 taxes now Income Tax Return for an S Corporation. Can you e file 2012 taxes now Limited liability company. Can you e file 2012 taxes now   A limited liability company (LLC) is an entity formed under state law by filing articles of organization as an LLC. Can you e file 2012 taxes now The members of an LLC are not personally liable for its debts. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now 7701-3. Can you e file 2012 taxes now For more information, see the instructions for Form 8832, Entity Classification Election. Can you e file 2012 taxes now Identification Numbers You must have a taxpayer identification number so the IRS can process your returns. Can you e file 2012 taxes now The two most common kinds of taxpayer identification numbers are the social security number (SSN) and the employer identification number (EIN). Can you e file 2012 taxes now An SSN is issued to individuals by the Social Security Administration (SSA) and is in the following format: 000–00–0000. Can you e file 2012 taxes now An EIN is issued to individuals (sole proprietors), partnerships, corporations, and other entities by the IRS and is in the following format: 00–0000000. Can you e file 2012 taxes now You must include your taxpayer identification number (SSN or EIN) on all returns and other documents you send to the IRS. Can you e file 2012 taxes now You must also furnish your number to other persons who use your identification number on any returns or documents they send to the IRS. Can you e file 2012 taxes now This includes returns or documents filed to report the following information. Can you e file 2012 taxes now Interest, dividends, royalties, etc. Can you e file 2012 taxes now , paid to you. Can you e file 2012 taxes now Any amount paid to you as a dependent care provider. Can you e file 2012 taxes now Certain other amounts paid to you that total $600 or more for the year. Can you e file 2012 taxes now If you do not furnish your identification number as required, you may be subject to penalties. Can you e file 2012 taxes now See Penalties, later. Can you e file 2012 taxes now Employer Identification Number (EIN) EINs are used to identify the tax accounts of employers, certain sole proprietors, corporations, partnerships, estates, trusts, and other entities. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Applying for an EIN. Can you e file 2012 taxes now   You may apply for an EIN: Online—Click on the EIN link at www. Can you e file 2012 taxes now irs. Can you e file 2012 taxes now gov/businesses/small. Can you e file 2012 taxes now The EIN is issued immediately once the application information is validated. Can you e file 2012 taxes now By telephone at 1-800-829-4933. Can you e file 2012 taxes now By mailing or faxing Form SS-4, Application for Employer Identification Number. Can you e file 2012 taxes now When to apply. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now If you apply by mail, file Form SS-4 at least 4 weeks before you need an EIN. Can you e file 2012 taxes now If you apply by telephone or through the IRS website, you can get an EIN immediately. Can you e file 2012 taxes now If you apply by fax, you can get an EIN within 4 business days. Can you e file 2012 taxes now   If you do not receive your EIN by the time a return is due, file your return anyway. Can you e file 2012 taxes now Write “Applied for” and the date you applied for the number in the space for the EIN. Can you e file 2012 taxes now Do not use your social security number as a substitute for an EIN on your tax returns. Can you e file 2012 taxes now More than one EIN. Can you e file 2012 taxes now   You should have only one EIN. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. Can you e file 2012 taxes now The IRS will tell you which number to use. Can you e file 2012 taxes now More information. Can you e file 2012 taxes now   For more information about EINs, see Publication 1635, Understanding Your EIN. Can you e file 2012 taxes now 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). Can you e file 2012 taxes now The forms used to report these payments must include the payee's identification number. Can you e file 2012 taxes now Employee. Can you e file 2012 taxes now   If you have employees, you must get an SSN from each of them. Can you e file 2012 taxes now Record the name and SSN of each employee exactly as they are shown on the employee's social security card. Can you e file 2012 taxes now If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. Can you e file 2012 taxes now This may occur, for example, if the employee's name has changed due to marriage or divorce. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now This form is available at SSA offices or by calling 1-800-772-1213. Can you e file 2012 taxes now It is also available from the SSA website at www. Can you e file 2012 taxes now ssa. Can you e file 2012 taxes now gov. Can you e file 2012 taxes now Other payee. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now If you make reportable payments to an organization, such as a corporation or partnership, you must get its EIN. Can you e file 2012 taxes now   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. Can you e file 2012 taxes now This form is available from IRS offices or by calling 1-800-829-3676. Can you e file 2012 taxes now It is also available from the IRS website at IRS. Can you e file 2012 taxes now gov. Can you e file 2012 taxes now    If the payee does not provide you with an identification number, you may have to withhold part of the payments as backup withholding. Can you e file 2012 taxes now For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. Can you e file 2012 taxes now Tax Year You must figure your taxable income and file an income tax return based on an annual accounting period called a tax year. Can you e file 2012 taxes now A tax year is usually 12 consecutive months. Can you e file 2012 taxes now There are two kinds of tax years. Can you e file 2012 taxes now Calendar tax year. Can you e file 2012 taxes now A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. Can you e file 2012 taxes now Fiscal tax year. Can you e file 2012 taxes now A fiscal tax year is 12 consecutive months ending on the last day of any month except December. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now You must use a calendar tax year if: You keep no books. Can you e file 2012 taxes now You have no annual accounting period. Can you e file 2012 taxes now Your present tax year does not qualify as a fiscal year. Can you e file 2012 taxes now You are required to use a calendar year by a provision of the Internal Revenue Code or the Income Tax Regulations. Can you e file 2012 taxes now For more information, see Publication 538, Accounting Periods and Methods. Can you e file 2012 taxes now First-time filer. Can you e file 2012 taxes now   If you have never filed an income tax return, you can adopt either a calendar tax year or a fiscal tax year. Can you e file 2012 taxes now You adopt a tax year by filing your first income tax return using that tax year. Can you e file 2012 taxes now You have not adopted a tax year if you merely did any of the following. Can you e file 2012 taxes now Filed an application for an extension of time to file an income tax return. Can you e file 2012 taxes now Filed an application for an employer identification number. Can you e file 2012 taxes now Paid estimated taxes for that tax year. Can you e file 2012 taxes now Changing your tax year. Can you e file 2012 taxes now   Once you have adopted your tax year, you may have to get IRS approval to change it. Can you e file 2012 taxes now To get approval, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year. Can you e file 2012 taxes now You may have to pay a fee. Can you e file 2012 taxes now For more information, see Publication 538. Can you e file 2012 taxes now Accounting Method An accounting method is a set of rules used to determine when and how income and expenses are reported. Can you e file 2012 taxes now You choose an accounting method for your business when you file your first income tax return. Can you e file 2012 taxes now There are two basic accounting methods. Can you e file 2012 taxes now Cash method. Can you e file 2012 taxes now Under the cash method, you report income in the tax year you receive it. Can you e file 2012 taxes now You usually deduct or capitalize expenses in the tax year you pay them. Can you e file 2012 taxes now Accrual method. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now You deduct or capitalize expenses in the tax year you incur them, whether or not you pay them that year. Can you e file 2012 taxes now For other methods, see Publication 538. Can you e file 2012 taxes now If you need inventories to show income correctly, you must generally use an accrual method of accounting for purchases and sales. Can you e file 2012 taxes now Inventories include goods held for sale in the normal course of business. Can you e file 2012 taxes now They also include raw materials and supplies that will physically become a part of merchandise intended for sale. Can you e file 2012 taxes now Inventories are explained in Publication 538. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now For more information, see Publication 538. Can you e file 2012 taxes now You must use the same accounting method to figure your taxable income and to keep your books. Can you e file 2012 taxes now Also, you must use an accounting method that clearly shows your income. Can you e file 2012 taxes now In general, any accounting method that consistently uses accounting principles suitable for your trade or business clearly shows income. Can you e file 2012 taxes now An accounting method clearly shows income only if it treats all items of gross income and expense the same from year to year. Can you e file 2012 taxes now More than one business. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now You must keep a complete and separate set of books and records for each business. Can you e file 2012 taxes now Changing your method of accounting. Can you e file 2012 taxes now   Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now For examples of changes that require approval and information on how to get approval for the change, see Publication 538. Can you e file 2012 taxes now Business Taxes The form of business you operate determines what taxes you must pay and how you pay them. Can you e file 2012 taxes now The following are the four general kinds of business taxes. Can you e file 2012 taxes now Income tax. Can you e file 2012 taxes now Self-employment tax. Can you e file 2012 taxes now Employment taxes. Can you e file 2012 taxes now Excise taxes. Can you e file 2012 taxes now See Table 2 for the forms you file to report these taxes. Can you e file 2012 taxes now You may want to get Publication 509. Can you e file 2012 taxes now It has tax calendars that tell you when to file returns and make tax payments. Can you e file 2012 taxes now Income Tax All businesses except partnerships must file an annual income tax return. Can you e file 2012 taxes now Partnerships file an information return. Can you e file 2012 taxes now Which form you use depends on how your business is organized. Can you e file 2012 taxes now See Table 2 to find out which return you have to file. Can you e file 2012 taxes now The federal income tax is a pay-as-you-go tax. Can you e file 2012 taxes now You must pay the tax as you earn or receive income during the year. Can you e file 2012 taxes now An employee usually has income tax withheld from his or her pay. Can you e file 2012 taxes now If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Can you e file 2012 taxes now If you are not required to make estimated tax payments, you may pay any tax due when you file your return. Can you e file 2012 taxes now Table 2. Can you e file 2012 taxes now Which Forms Must I File? IF you are a. Can you e file 2012 taxes now . Can you e file 2012 taxes now . Can you e file 2012 taxes now   THEN you may be liable for. Can you e file 2012 taxes now . Can you e file 2012 taxes now . Can you e file 2012 taxes now   Use Form. Can you e file 2012 taxes now . Can you e file 2012 taxes now . Can you e file 2012 taxes now 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. Can you e file 2012 taxes now 2 Various other schedules may be needed. Can you e file 2012 taxes now Estimated tax. Can you e file 2012 taxes now   Generally, you must pay taxes on income, including self-employment tax (discussed next), by making regular payments of estimated tax during the year. Can you e file 2012 taxes now Sole proprietors, partners, and S corporation shareholders. Can you e file 2012 taxes now   You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. Can you e file 2012 taxes now Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. Can you e file 2012 taxes now For more information, see Publication 505, Tax Withholding and Estimated Tax. Can you e file 2012 taxes now Corporations. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now Use Form 1120-W, Estimated Tax for Corporations, to figure the estimated tax. Can you e file 2012 taxes now You must deposit the payments as explained later under Depositing Taxes. Can you e file 2012 taxes now For more information, see Publication 542. Can you e file 2012 taxes now Self-Employment Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Can you e file 2012 taxes now Your payments of SE tax contribute to your coverage under the social security system. Can you e file 2012 taxes now Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. Can you e file 2012 taxes now You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. Can you e file 2012 taxes now Your net earnings from self-employment were $400 or more. Can you e file 2012 taxes now You had church employee income of $108. Can you e file 2012 taxes now 28 or more. Can you e file 2012 taxes now Use Schedule SE (Form 1040) to figure your SE tax. Can you e file 2012 taxes now For more information, see Publication 334, Tax Guide for Small Business. Can you e file 2012 taxes now You can deduct a portion of your SE tax as an adjustment to income on your Form 1040. Can you e file 2012 taxes now The Social Security Administration (SSA) time limit for posting self-employment income. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now The SSA will not change its records to increase your self-employment income. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Employment taxes include the following. Can you e file 2012 taxes now Social security and Medicare taxes. Can you e file 2012 taxes now Federal income tax withholding. Can you e file 2012 taxes now Federal unemployment (FUTA) tax. Can you e file 2012 taxes now If you have employees, you will need to get Publication 15, Circular E, Employer's Tax Guide. Can you e file 2012 taxes now If you have agricultural employees, get Publication 51, Circular A, Agricultural Employer's Tax Guide. Can you e file 2012 taxes now These publications explain your tax responsibilities as an employer. Can you e file 2012 taxes now If you are not sure whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. Can you e file 2012 taxes now That publication has information to help you determine whether an individual is an employee or an independent contractor. Can you e file 2012 taxes now If you classify an employee as an independent contractor, you can be held liable for employment taxes for that worker plus a penalty. Can you e file 2012 taxes now An independent contractor is someone who is self-employed. Can you e file 2012 taxes now Generally, you do not have to withhold or pay any taxes on payments to an independent contractor. Can you e file 2012 taxes now Federal Income, Social Security, and Medicare Taxes You generally must withhold federal income tax from your employee's wages. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Social security and Medicare taxes pay for benefits that workers and their families receive under the Federal Insurance Contributions Act (FICA). Can you e file 2012 taxes now Social security tax pays for benefits under the old-age, survivors, and disability insurance part of FICA. Can you e file 2012 taxes now Medicare tax pays for benefits under the hospital insurance part of FICA. Can you e file 2012 taxes now You withhold part of these taxes from your employee's wages and you pay a part yourself. Can you e file 2012 taxes now To find out how much social security and Medicare tax to withhold and to pay, see Publication 15. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now (Farm employers use Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. Can you e file 2012 taxes now ) 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. Can you e file 2012 taxes now You report and pay FUTA tax separately from social security and Medicare taxes and withheld income tax. Can you e file 2012 taxes now You pay FUTA tax only from your own funds. Can you e file 2012 taxes now Employees do not pay this tax or have it withheld from their pay. Can you e file 2012 taxes now Which form do I file?   Report federal unemployment tax on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. Can you e file 2012 taxes now See Publication 15 to find out if you can use this form. Can you e file 2012 taxes now Hiring Employees Have the employees you hire fill out Form I-9 and Form W-4. Can you e file 2012 taxes now Form I-9. Can you e file 2012 taxes now   You must verify that each new employee is legally eligible to work in the United States. Can you e file 2012 taxes now Both you and the employee must complete the U. Can you e file 2012 taxes now S. Can you e file 2012 taxes now Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. Can you e file 2012 taxes now You can get the form from USCIS offices or from the USCIS website at www. Can you e file 2012 taxes now uscis. Can you e file 2012 taxes now gov. Can you e file 2012 taxes now Call the USCIS at 1-800-375-5283 for more information about your responsibilities. Can you e file 2012 taxes now Form W-4. Can you e file 2012 taxes now   Each employee must fill out Form W-4, Employee's Withholding Allowance Certificate. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now For more information, see Publication 15. Can you e file 2012 taxes now Employees claiming more than 10 withholding allowances. Can you e file 2012 taxes now   An employer of an employee who claims more than 10 withholding allowances for wages paid can use several methods of withholding. Can you e file 2012 taxes now See section 16 of Publication 15. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now You must also send copies to the Social Security Administration. Can you e file 2012 taxes now See Information Returns, later, for more information on Form W-2. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Manufacture or sell certain products. Can you e file 2012 taxes now Operate certain kinds of businesses. Can you e file 2012 taxes now Use various kinds of equipment, facilities, or products. Can you e file 2012 taxes now Receive payment for certain services. Can you e file 2012 taxes now For more information on excise taxes, see Publication 510, Excise Taxes. Can you e file 2012 taxes now Form 720. Can you e file 2012 taxes now   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. Can you e file 2012 taxes now Environmental taxes. Can you e file 2012 taxes now Communications and air transportation taxes. Can you e file 2012 taxes now Fuel taxes. Can you e file 2012 taxes now Tax on the first retail sale of heavy trucks, trailers, and tractors. Can you e file 2012 taxes now Manufacturers taxes on the sale or use of a variety of different articles. Can you e file 2012 taxes now Form 2290. Can you e file 2012 taxes now   There is a federal excise tax on certain trucks, truck tractors, and buses used on public highways. Can you e file 2012 taxes now The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. Can you e file 2012 taxes now Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. Can you e file 2012 taxes now For more information, see the instructions for Form 2290. Can you e file 2012 taxes now Form 730. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now Use Form 730, Monthly Tax Return for Wagers, to figure the tax on the wagers you receive. Can you e file 2012 taxes now Form 11-C. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now Depositing Taxes You generally have to deposit employment taxes, certain excise taxes, corporate income tax, and S corporation taxes before you file your return. Can you e file 2012 taxes now Generally, taxpayers are required to deposit taxes through the Electronic Federal Tax Payment System (EFTPS). Can you e file 2012 taxes now Any business that has a federal tax obligation and requests a new EIN will automatically be enrolled in EFTPS. Can you e file 2012 taxes now Through the mail, the business will receive an EFTPS PIN package that contains instructions for activating its EFTPS enrollment. Can you e file 2012 taxes now Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now You must give a copy of each information return you are required to file to the recipient or payer. Can you e file 2012 taxes now In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. Can you e file 2012 taxes now For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. Can you e file 2012 taxes now Form 1099-MISC. Can you e file 2012 taxes now   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your trade or business. Can you e file 2012 taxes now These payments include the following items. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Rent payments of $600 or more, other than rents paid to real estate agents. Can you e file 2012 taxes now Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. Can you e file 2012 taxes now Royalty payments of $10 or more. Can you e file 2012 taxes now Payments to certain crew members by operators of fishing boats. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Form W-2. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now For more information on what to report on Form W-2, see the Instructions for Forms W-2 and W-3. Can you e file 2012 taxes now Form 8300. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now Cash includes U. Can you e file 2012 taxes now S. Can you e file 2012 taxes now and foreign coin and currency. Can you e file 2012 taxes now It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. Can you e file 2012 taxes now For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). Can you e file 2012 taxes now Penalties The law provides penalties for not filing returns or paying taxes as required. Can you e file 2012 taxes now Criminal penalties may be imposed for willful failure to file, tax evasion, or making a false statement. Can you e file 2012 taxes now Failure to file tax returns. Can you e file 2012 taxes now   If you do not file your tax return by the due date, you may have to pay a penalty. Can you e file 2012 taxes now The penalty is based on the tax not paid by the due date. Can you e file 2012 taxes now See your tax return instructions for more information about this penalty. Can you e file 2012 taxes now Failure to pay tax. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now For more information, see your tax return instructions. Can you e file 2012 taxes now Failure to withhold, deposit, or pay taxes. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now You may also be subject to penalties if you deposit the taxes late. Can you e file 2012 taxes now For more information, see Publication 15. Can you e file 2012 taxes now Failure to follow information reporting requirements. Can you e file 2012 taxes now   The following penalties apply if you are required to file information returns. Can you e file 2012 taxes now For more information, see the General Instructions for Certain Information Returns. Can you e file 2012 taxes now Failure to file information returns. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Failure to furnish correct payee statements. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Waiver of penalty. Can you e file 2012 taxes now   These penalties will not apply if you can show that the failures were due to reasonable cause and not willful neglect. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now (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. Can you e file 2012 taxes now ) Failure to supply taxpayer identification number. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Business Expenses You can deduct business expenses on your income tax return. Can you e file 2012 taxes now These are the current operating costs of running your business. Can you e file 2012 taxes now To be deductible, a business expense must be both ordinary and necessary. Can you e file 2012 taxes now An ordinary expense is one that is common and accepted in your field of business, trade, or profession. Can you e file 2012 taxes now A necessary expense is one that is helpful and appropriate for your business, trade, or profession. Can you e file 2012 taxes now An expense does not have to be indispensable to be considered necessary. Can you e file 2012 taxes now The following are brief explanations of some expenses that are of interest to people starting a business. Can you e file 2012 taxes now There are many other expenses that you may be able to deduct. Can you e file 2012 taxes now See your form instructions and Publication 535, Business Expenses. Can you e file 2012 taxes now Business Start-Up Costs Business start-up costs are the expenses you incur before you actually begin business operations. Can you e file 2012 taxes now Your business start-up costs will depend on the type of business you are starting. Can you e file 2012 taxes now They may include costs for advertising, travel, surveys, and training. Can you e file 2012 taxes now These costs are generally capital expenses. Can you e file 2012 taxes now You usually recover costs for a particular asset (such as machinery or office equipment) through depreciation (discussed next). Can you e file 2012 taxes now 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. Can you e file 2012 taxes now The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Can you e file 2012 taxes now Any remaining cost must be amortized. Can you e file 2012 taxes now For more information about amortizing start-up and organizational costs, see chapter 7 in Publication 535. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now You must spread the cost over more than one tax year and deduct part of it each year. Can you e file 2012 taxes now This method of deducting the cost of business property is called depreciation. Can you e file 2012 taxes now Business property you must depreciate includes the following items. Can you e file 2012 taxes now Office furniture. Can you e file 2012 taxes now Buildings. Can you e file 2012 taxes now Machinery and equipment. Can you e file 2012 taxes now You can choose to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. Can you e file 2012 taxes now This deduction is known as the “section 179 deduction. Can you e file 2012 taxes now ” For more information about depreciation and the section 179 deduction, see Publication 946, How To Depreciate Property. Can you e file 2012 taxes now Depreciation must be taken in the year it is allowable. Can you e file 2012 taxes now Allowable depreciation not taken in a prior year cannot be taken in the current year. Can you e file 2012 taxes now If you do not deduct the correct depreciation, you may be able to make a correction by filing Form 1040X, Amended U. Can you e file 2012 taxes now S. Can you e file 2012 taxes now Individual Income Tax Return, or by changing your accounting method. Can you e file 2012 taxes now For more information on how to correct depreciation deductions, see chapter 1 in Publication 946. Can you e file 2012 taxes now Business Use of Your Home To deduct expenses related to the business use of part of your home, you must meet specific requirements. Can you e file 2012 taxes now Even then, your deduction may be limited. Can you e file 2012 taxes now To qualify to claim expenses for business use of your home, you must meet both the following tests. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Exclusive use. Can you e file 2012 taxes now   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. Can you e file 2012 taxes now The area used for business can be a room or other separately identifiable space. Can you e file 2012 taxes now The space does not need to be marked off by a permanent partition. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now Exceptions to exclusive use. Can you e file 2012 taxes now   You do not have to meet the exclusive use test if either of the following applies. Can you e file 2012 taxes now You use part of your home for the storage of inventory or product samples. Can you e file 2012 taxes now You use part of your home as a daycare facility. Can you e file 2012 taxes now For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). Can you e file 2012 taxes now Principal place of business. Can you e file 2012 taxes now   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. Can you e file 2012 taxes now You use it exclusively and regularly for administrative or management activities of your trade or business. Can you e file 2012 taxes now You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now The relative importance of the activities performed at each location. Can you e file 2012 taxes now If the relative importance factor does not determine your principal place of business, the time spent at each location. Can you e file 2012 taxes now    If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. Can you e file 2012 taxes now However, for other ways to qualify to deduct home office expenses, see Publication 587. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now If you file Schedule F (Form 1040) or you are a partner, you can use the worksheet in Publication 587. Can you e file 2012 taxes now More information. Can you e file 2012 taxes now   For more information about business use of your home, see Publication 587. Can you e file 2012 taxes now Car and Truck Expenses If you use your car or truck in your business, you can deduct the costs of operating and maintaining it. Can you e file 2012 taxes now You generally can deduct either your actual expenses or the standard mileage rate. Can you e file 2012 taxes now Actual expenses. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now You can divide your expenses based on the miles driven for each purpose. Can you e file 2012 taxes now Example. Can you e file 2012 taxes now You are the sole proprietor of a flower shop. Can you e file 2012 taxes now You drove your van 20,000 miles during the year. Can you e file 2012 taxes now 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use. Can you e file 2012 taxes now You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. Can you e file 2012 taxes now Standard mileage rate. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now You can use the standard mileage rate for a vehicle you own or lease. Can you e file 2012 taxes now The standard mileage rate is a specified amount of money you can deduct for each business mile you drive. Can you e file 2012 taxes now It is announced annually by the IRS. Can you e file 2012 taxes now To figure your deduction, multiply your business miles by the standard mileage rate for the year. Can you e file 2012 taxes now    Generally, if you use the standard mileage rate, you cannot deduct your actual expenses. Can you e file 2012 taxes now However, you may be able to deduct business-related parking fees, tolls, interest on your car loan, and certain state and local taxes. Can you e file 2012 taxes now Choosing the standard mileage rate. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now In later years, you can choose to use either the standard mileage rate or actual expenses. Can you e file 2012 taxes now   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). Can you e file 2012 taxes now Additional information. Can you e file 2012 taxes now   For more information about the rules for claiming car and truck expenses, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Can you e file 2012 taxes now Recordkeeping This part explains why you must keep records, what kinds of records you must keep, and how to keep them. Can you e file 2012 taxes now It also explains how long you must keep your records for federal tax purposes. Can you e file 2012 taxes now A sample recordkeeping system is illustrated at the end of this part. Can you e file 2012 taxes now Why Keep Records? Everyone in business must keep records. Can you e file 2012 taxes now Good records will help you do the following. Can you e file 2012 taxes now Monitor the progress of your business. Can you e file 2012 taxes now   You need good records to monitor the progress of your business. Can you e file 2012 taxes now Records can show whether your business is improving, which items are selling, or what changes you need to make. Can you e file 2012 taxes now Good records can increase the likelihood of business success. Can you e file 2012 taxes now Prepare your financial statements. Can you e file 2012 taxes now   You need good records to prepare accurate financial statements. Can you e file 2012 taxes now These include income (profit and loss) statements and balance sheets. Can you e file 2012 taxes now These statements can help you in dealing with your bank or creditors and help you manage your business. Can you e file 2012 taxes now An income statement shows the income and expenses of the business for a given period of time. Can you e file 2012 taxes now A balance sheet shows the assets, liabilities, and your equity in the business on a given date. Can you e file 2012 taxes now Identify source of receipts. Can you e file 2012 taxes now   You will receive money or property from many sources. Can you e file 2012 taxes now Your records can identify the source of your receipts. Can you e file 2012 taxes now You need this information to separate business from nonbusiness receipts and taxable from nontaxable income. Can you e file 2012 taxes now Keep track of deductible expenses. Can you e file 2012 taxes now   You may forget expenses when you prepare your tax return unless you record them when they occur. Can you e file 2012 taxes now Prepare your tax returns. Can you e file 2012 taxes now   You need good records to prepare your tax returns. Can you e file 2012 taxes now These records must support the income, expenses, and credits you report. Can you e file 2012 taxes now Generally, these are the same records you use to monitor your business and prepare your financial statements. Can you e file 2012 taxes now Support items reported on tax returns. Can you e file 2012 taxes now   You must keep your business records available at all times for inspection by the IRS. Can you e file 2012 taxes now If the IRS examines any of your tax returns, you may be asked to explain the items reported. Can you e file 2012 taxes now A complete set of records will speed up the examination. Can you e file 2012 taxes now Kinds of Records To Keep Except in a few cases, the law does not require any specific kind of records. Can you e file 2012 taxes now You can choose any recordkeeping system suited to your business that clearly shows your income and expenses. Can you e file 2012 taxes now The business you are in affects the type of records you need to keep for federal tax purposes. Can you e file 2012 taxes now You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. Can you e file 2012 taxes now See Accounting Method, earlier. Can you e file 2012 taxes now If you are in more than one business, you should keep a complete and separate set of records for each business. Can you e file 2012 taxes now A corporation should keep minutes of board of directors' meetings. Can you e file 2012 taxes now Your recordkeeping system should include a summary of your business transactions. Can you e file 2012 taxes now This summary is ordinarily made in your books (for example, accounting journals and ledgers). Can you e file 2012 taxes now Your books must show your gross income, as well as your deductions and credits. Can you e file 2012 taxes now For most small businesses, the business checkbook (discussed later) is the main source for entries in the business books. Can you e file 2012 taxes now In addition, you must keep supporting documents, explained later. Can you e file 2012 taxes now Electronic records. Can you e file 2012 taxes now   All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now The electronic storage system must index, store, preserve, retrieve and reproduce the electronically stored books and records in legible format. Can you e file 2012 taxes now All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. Can you e file 2012 taxes now Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now You still have the responsibility of retaining any other books and records that are required to be retained. Can you e file 2012 taxes now   The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. Can you e file 2012 taxes now This test is not considered an examination and the results must be shared with you. Can you e file 2012 taxes now If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now For details on electronic storage system requirements, see Revenue Procedure 97-22, available in Internal Revenue Bulletin 1997-13. Can you e file 2012 taxes now Supporting Documents Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. Can you e file 2012 taxes now Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks. Can you e file 2012 taxes now These documents contain information you need to record in your books. Can you e file 2012 taxes now It is important to keep these documents because they support the entries in your books and on your tax return. Can you e file 2012 taxes now Keep them in an orderly fashion and in a safe place. Can you e file 2012 taxes now For instance, organize them by year and type of income or expense. Can you e file 2012 taxes now Gross receipts. Can you e file 2012 taxes now   Gross receipts are the income you receive from your business. Can you e file 2012 taxes now You should keep supporting documents that show the amounts and sources of your gross receipts. Can you e file 2012 taxes now Documents that show gross receipts include the following. Can you e file 2012 taxes now Cash register tapes. Can you e file 2012 taxes now Bank deposit slips. Can you e file 2012 taxes now Receipt books. Can you e file 2012 taxes now Invoices. Can you e file 2012 taxes now Credit card charge slips. Can you e file 2012 taxes now Forms 1099-MISC. Can you e file 2012 taxes now Purchases. Can you e file 2012 taxes now   Purchases are the items you buy and resell to customers. Can you e file 2012 taxes now If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into finished products. Can you e file 2012 taxes now Your supporting documents should show the amount paid and that the amount was for purchases. Can you e file 2012 taxes now Documents for purchases include the following. Can you e file 2012 taxes now Canceled checks. Can you e file 2012 taxes now Cash register tape receipts. Can you e file 2012 taxes now Credit card sales slips. Can you e file 2012 taxes now Invoices. Can you e file 2012 taxes now These records will help you determine the value of your inventory at the end of the year. Can you e file 2012 taxes now See Publication 538 for information on methods for valuing inventory. Can you e file 2012 taxes now Expenses. Can you e file 2012 taxes now   Expenses are the costs you incur (other than purchases) to carry on your business. Can you e file 2012 taxes now Your supporting documents should show the amount paid and that the amount was for a business expense. Can you e file 2012 taxes now Documents for expenses include the following. Can you e file 2012 taxes now Canceled checks. Can you e file 2012 taxes now Cash register tapes. Can you e file 2012 taxes now Account statements. Can you e file 2012 taxes now Credit card sales slips. Can you e file 2012 taxes now Invoices. Can you e file 2012 taxes now Petty cash slips for small cash payments. Can you e file 2012 taxes now    A petty cash fund allows you to make small payments without having to write checks for small amounts. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Travel, transportation, entertainment, and gift expenses. Can you e file 2012 taxes now   Specific recordkeeping rules apply to these expenses. Can you e file 2012 taxes now For more information, see Publication 463. Can you e file 2012 taxes now Employment taxes. Can you e file 2012 taxes now   There are specific employment tax records you must keep. Can you e file 2012 taxes now For a list, see Publication 15. Can you e file 2012 taxes now Assets. Can you e file 2012 taxes now   Assets are the property, such as machinery and furniture you own and use in your business. Can you e file 2012 taxes now You must keep records to verify certain information about your business assets. Can you e file 2012 taxes now You need records to figure the annual depreciation and the gain or loss when you sell the assets. Can you e file 2012 taxes now Your records should show the following information. Can you e file 2012 taxes now When and how you acquired the asset. Can you e file 2012 taxes now Purchase price. Can you e file 2012 taxes now Cost of any improvements. Can you e file 2012 taxes now Section 179 deduction taken. Can you e file 2012 taxes now Deductions taken for depreciation. Can you e file 2012 taxes now Deductions taken for casualty losses, such as losses resulting from fires or storms. Can you e file 2012 taxes now How you used the asset. Can you e file 2012 taxes now When and how you disposed of the asset. Can you e file 2012 taxes now Selling price. Can you e file 2012 taxes now Expenses of sale. Can you e file 2012 taxes now   The following documents may show this information. Can you e file 2012 taxes now Purchase and sales invoices. Can you e file 2012 taxes now Real estate closing statements. Can you e file 2012 taxes now Canceled checks. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now These include account statements prepared for the financial institution by a third party. Can you e file 2012 taxes now These account statements must be highly legible. Can you e file 2012 taxes now The following table lists acceptable account statements. Can you e file 2012 taxes now  IF payment is by. Can you e file 2012 taxes now . Can you e file 2012 taxes now . Can you e file 2012 taxes now THEN the statement must show the. Can you e file 2012 taxes now . Can you e file 2012 taxes now . Can you e file 2012 taxes now Check Check number. Can you e file 2012 taxes now Amount. Can you e file 2012 taxes now Payee's name. Can you e file 2012 taxes now Date the check amount was posted to the account by the financial institution. Can you e file 2012 taxes now Electronic funds transfer Amount transferred. Can you e file 2012 taxes now Payee's name. Can you e file 2012 taxes now Date the transfer was posted to the account by the financial institution. Can you e file 2012 taxes now Credit card Amount charged. Can you e file 2012 taxes now Payee's name. Can you e file 2012 taxes now Transaction date. Can you e file 2012 taxes now    Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. Can you e file 2012 taxes now You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost. Can you e file 2012 taxes now Recording Business Transactions A good recordkeeping system includes a summary of your business transactions. Can you e file 2012 taxes now (Your business transactions are shown on the supporting documents just discussed. Can you e file 2012 taxes now ) Business transactions are ordinarily summarized in books called journals and ledgers. Can you e file 2012 taxes now You can buy them at your local stationery or office supply store. Can you e file 2012 taxes now A journal is a book where you record each business transaction shown on your supporting documents. Can you e file 2012 taxes now You may have to keep separate journals for transactions that occur frequently. Can you e file 2012 taxes now A ledger is a book that contains the totals from all of your journals. Can you e file 2012 taxes now It is organized into different accounts. Can you e file 2012 taxes now Whether you keep journals and ledgers and how you keep them depends on the type of business you are in. Can you e file 2012 taxes now For example, a recordkeeping system for a small business might include the following items. Can you e file 2012 taxes now Business checkbook. Can you e file 2012 taxes now Daily summary of cash receipts. Can you e file 2012 taxes now Monthly summary of cash receipts. Can you e file 2012 taxes now Check disbursements journal. Can you e file 2012 taxes now Depreciation worksheet. Can you e file 2012 taxes now Employee compensation record. Can you e file 2012 taxes now The business checkbook is explained next. Can you e file 2012 taxes now The other items are illustrated later under Sample Record System. Can you e file 2012 taxes now The system you use to record business transactions will be more effective if you follow good recordkeeping practices. Can you e file 2012 taxes now For example, record expenses when they occur, and identify the source of recorded receipts. Can you e file 2012 taxes now Generally, it is best to record transactions on a daily basis. Can you e file 2012 taxes now Business checkbook. Can you e file 2012 taxes now   One of the first things you should do when you start a business is open a business checking account. Can you e file 2012 taxes now You should keep your business account separate from your personal checking account. Can you e file 2012 taxes now   The business checkbook is your basic source of information for recording your business expenses. Can you e file 2012 taxes now You should deposit all daily receipts in your business checking account. Can you e file 2012 taxes now You should check your account for errors by reconciling it. Can you e file 2012 taxes now See Reconciling the checking account, later. Can you e file 2012 taxes now   Consider using a checkbook that allows enough space to identify the source of deposits as business income, personal funds, or loans. Can you e file 2012 taxes now You should also note on the deposit slip the source of the deposit and keep copies of all slips. Can you e file 2012 taxes now   You should make all payments by check to document business expenses. Can you e file 2012 taxes now Write checks payable to yourself only when making withdrawals from your business for personal use. Can you e file 2012 taxes now Avoid writing checks payable to cash. Can you e file 2012 taxes now If you must write a check for cash to pay a business expense, include the receipt for the cash payment in your records. Can you e file 2012 taxes now If you cannot get a receipt for a cash payment, you should make an adequate explanation in your records at the time of payment. Can you e file 2012 taxes now    Use the business account for business purposes only. Can you e file 2012 taxes now Indicate the source of deposits and the type of expense in the checkbook. Can you e file 2012 taxes now Reconciling the checking account. Can you e file 2012 taxes now   When you receive your bank statement, make sure the statement, your checkbook, and your books agree. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now    You should reconcile your checking account each month. Can you e file 2012 taxes now     Before you reconcile your monthly bank statement, check your own figures. Can you e file 2012 taxes now Begin with the balance shown in your checkbook at the end of the previous month. Can you e file 2012 taxes now To this balance, add the total cash deposited during the month and subtract the total cash disbursements. Can you e file 2012 taxes now   After checking your figures, the result should agree with your checkbook balance at the end of the month. Can you e file 2012 taxes now If the result does not agree, you may have made an error in recording a check or deposit. Can you e file 2012 taxes now You can find the error by doing the following. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Adding the deposit amounts in your checkbook. Can you e file 2012 taxes now Compare that total with the monthly total in your cash receipt book, if you have one. Can you e file 2012 taxes now If the totals do not agree, check the individual amounts to find any errors. Can you e file 2012 taxes now   If your checkbook and journal entries still disagree, then refigure the running balance in your checkbook to make sure additions and subtractions are correct. Can you e file 2012 taxes now   When your checkbook balance agrees with the balance figured from the journal entries, you may begin reconciling your checkbook with the bank statement. Can you e file 2012 taxes now Many banks print a reconciliation worksheet on the back of the statement. Can you e file 2012 taxes now   To reconcile your account, follow these steps. Can you e file 2012 taxes now Compare the deposits listed on the bank statement with the deposits shown in your checkbook. Can you e file 2012 taxes now Note all differences in the dollar amounts. Can you e file 2012 taxes now Compare each canceled check, including both check number and dollar amount, with the entry in your checkbook. Can you e file 2012 taxes now Note all differences in the dollar amounts. Can you e file 2012 taxes now Mark the check number in the checkbook as having cleared the bank. Can you e file 2012 taxes now After accounting for all checks returned by the bank, those not marked in your checkbook are your outstanding checks. Can you e file 2012 taxes now Prepare a bank reconciliation. Can you e file 2012 taxes now One is illustrated later under Sample Record System. Can you e file 2012 taxes now Update your checkbook and journals for items shown on the reconciliation as not recorded (such as service charges) or recorded incorrectly. Can you e file 2012 taxes now At this point, the adjusted bank statement balance should equal your adjusted checkbook balance. Can you e file 2012 taxes now If you still have differences, check the previous steps to find the errors. Can you e file 2012 taxes now   Table 3. Can you e file 2012 taxes now Period of Limitations IF you. Can you e file 2012 taxes now . Can you e file 2012 taxes now . Can you e file 2012 taxes now   THEN the period is. Can you e file 2012 taxes now . Can you e file 2012 taxes now . Can you e file 2012 taxes now 1. Can you e file 2012 taxes now Owe additional tax and situations (2), (3), and (4), below, do not apply to you   3 years 2. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now File a fraudulent return   Not limited 4. Can you e file 2012 taxes now Do not file a return   Not limited 5. Can you e file 2012 taxes now File a claim for credit or refund after you filed your return   Later of: 3 years or  2 years after tax   was paid 6. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now The single-entry system of bookkeeping is the simplest to maintain, but it may not be suitable for everyone. Can you e file 2012 taxes now You may find the double-entry system better because it has built-in checks and balances to assure accuracy and control. Can you e file 2012 taxes now Single-entry. Can you e file 2012 taxes now   A single-entry system is based on the income statement (profit or loss statement). Can you e file 2012 taxes now It can be a simple and practical system if you are starting a small business. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Double-entry. Can you e file 2012 taxes now   A double-entry bookkeeping system uses journals and ledgers. Can you e file 2012 taxes now Transactions are first entered in a journal and then posted to ledger accounts. Can you e file 2012 taxes now These accounts show income, expenses, assets (property a business owns), liabilities (debts of a business), and net worth (excess of assets over liabilities). Can you e file 2012 taxes now You close income and expense accounts at the end of each tax year. Can you e file 2012 taxes now You keep asset, liability, and net worth accounts open on a permanent basis. Can you e file 2012 taxes now   In the double-entry system, each account has a left side for debits and a right side for credits. Can you e file 2012 taxes now It is self-balancing because you record every transaction as a debit entry in one account and as a credit entry in another. Can you e file 2012 taxes now   Under this system, the total debits must equal the total credits after you post the journal entries to the ledger accounts. Can you e file 2012 taxes now If the amounts do not balance, you have made an error and you must find and correct it. Can you e file 2012 taxes now   An example of a journal entry exhibiting a payment of rent in October is shown next. Can you e file 2012 taxes now General Journal Date Description of Entry Debit  Credit Oct. Can you e file 2012 taxes now 5 Rent expense 780. Can you e file 2012 taxes now 00     Cash   780. Can you e file 2012 taxes now 00                 Computerized System There are computer software packages you can use for recordkeeping. Can you e file 2012 taxes now They can be purchased in many retail stores. Can you e file 2012 taxes now These packages are very helpful and relatively easy to use; they require very little knowledge of bookkeeping and accounting. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now To meet this qualification, the machine-sensible records must reconcile with your books and return. Can you e file 2012 taxes now These records must provide enough detail to identify the underlying source documents. Can you e file 2012 taxes now You must also keep all machine-sensible records and a complete description of the computerized portion of your recordkeeping system. Can you e file 2012 taxes now This documentation must be sufficiently detailed to show all of the following items. Can you e file 2012 taxes now Functions being performed as the data flows through the system. Can you e file 2012 taxes now Controls used to ensure accurate and reliable processing. Can you e file 2012 taxes now Controls used to prevent the unauthorized addition, alteration, or deletion of retained records. Can you e file 2012 taxes now Charts of accounts and detailed account descriptions. Can you e file 2012 taxes now See Revenue Procedure 98-25 in Cumulative Bulletin 1998-1 for more information. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Table 3 contains the periods of limitations that apply to income tax returns. Can you e file 2012 taxes now Unless otherwise stated, the years refer to the period after the return was filed. Can you e file 2012 taxes now Returns filed before the due date are treated as filed on the due date. Can you e file 2012 taxes now Keep copies of your filed tax returns. Can you e file 2012 taxes now They help in preparing future tax returns and making computations if you file an amended return. Can you e file 2012 taxes now Employment taxes. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now For more information about recordkeeping for employment taxes, see Publication 15. Can you e file 2012 taxes now Assets. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Records for nontax purposes. Can you e file 2012 taxes now   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. Can you e file 2012 taxes now For example, your insurance company or creditors may require you to keep them longer than the IRS does. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Henry uses part-time help, has no inventory of items held for sale, and uses the cash method of accounting. Can you e file 2012 taxes now These sample records should not be viewed as a recommendation of how to keep your records. Can you e file 2012 taxes now They are intended only to show how one business keeps its records. Can you e file 2012 taxes now 1. Can you e file 2012 taxes now Daily Summary of Cash Receipts This summary is a record of cash sales for the day. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now Henry takes the cash sales entry from his cash register tape. Can you e file 2012 taxes now If he had no cash register, he would simply total his cash sale slips and any other cash received that day. Can you e file 2012 taxes now He carries the total receipts shown in this summary for January 3 ($267. Can you e file 2012 taxes now 80), including cash sales ($263. Can you e file 2012 taxes now 60) and sales tax ($4. Can you e file 2012 taxes now 20), to the Monthly Summary of Cash Receipts. Can you e file 2012 taxes now Petty cash fund. Can you e file 2012 taxes now   Henry uses a petty cash fund to make small payments without having to write checks for small amounts. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now He sets up a fixed amount ($50) in his petty cash fund. Can you e file 2012 taxes now The total of the unspent petty cash and the amounts on the petty cash slips should equal the fixed amount of the fund. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now (See the Check Disbursements Journal entry for check number 92. Can you e file 2012 taxes now ) This restores the fund to its fixed amount of $50. Can you e file 2012 taxes now He then summarizes the slips and enters them in the proper columns in the monthly check disbursements journal. Can you e file 2012 taxes now 2. Can you e file 2012 taxes now Monthly Summary of Cash Receipts This shows the income activity for the month. Can you e file 2012 taxes now Henry carries the total monthly net sales shown in this summary for January ($4,865. Can you e file 2012 taxes now 05) to his Annual Summary. Can you e file 2012 taxes now 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. Can you e file 2012 taxes now He cannot take a deduction for sales tax turned over to the state because he only collected the tax. Can you e file 2012 taxes now He does not include the tax in his income. Can you e file 2012 taxes now 3. Can you e file 2012 taxes now Check Disbursements Journal Henry enters checks drawn on the business checking account in the Check Disbursements Journal each day. Can you e file 2012 taxes now All checks are prenumbered and each check number is listed and accounted for in the column provided in the journal. Can you e file 2012 taxes now Frequent expenses have their own headings across the sheet. Can you e file 2012 taxes now He enters in a separate column expenses that require comparatively numerous or large payments each month, such as materials, gross payroll, and rent. Can you e file 2012 taxes now Under the General Accounts column, he enters small expenses that normally have only one or two monthly payments, such as licenses and postage. Can you e file 2012 taxes now Henry does not pay personal or nonbusiness expenses by checks drawn on the business account. Can you e file 2012 taxes now If he did, he would record them in the journal, even though he could not deduct them as business expenses. Can you e file 2012 taxes now Henry carries the January total of expenses for materials ($1,083. Can you e file 2012 taxes now 50) to the Annual Summary. Can you e file 2012 taxes now Similarly, he enters the monthly total of expenses for telephone, truck/auto, etc. Can you e file 2012 taxes now , in the appropriate columns of that summary. Can you e file 2012 taxes now 4. Can you e file 2012 taxes now Employee Compensation Record This record shows the following information. Can you e file 2012 taxes now The number of hours Henry's employee worked in a pay period. Can you e file 2012 taxes now The employee's total pay for the period. Can you e file 2012 taxes now The deductions Henry withheld in figuring the employee's net pay. Can you e file 2012 taxes now The monthly gross payroll. Can you e file 2012 taxes now Henry carries the January gross payroll ($520) to the Annual Summary. Can you e file 2012 taxes now 5. Can you e file 2012 taxes now Annual Summary This annual summary of monthly cash receipts and expense totals provides the final amounts to enter on Henry's tax return. Can you e file 2012 taxes now He figures the cash receipts total from the total of monthly cash receipts shown in the Monthly Summary of Cash Receipts. Can you e file 2012 taxes now He figures the expense totals from the totals of monthly expense items shown in the Check Disbursements Journal. Can you e file 2012 taxes now As in the journal, he keeps each major expense in a separate column. Can you e file 2012 taxes now Henry carries the cash receipts total shown in the annual summary ($47,440. Can you e file 2012 taxes now 9
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Get the Facts About Renting

A lease is an agreement that outlines the obligations of the owner and the tenants of a house or apartment. It is a legally binding document that courts will generally uphold in legal proceedings, so it is important for you to know the exact terms of the lease agreement before you sign it. Before agreeing to lease a home to you, a landlord may review your credit report, so you may want to get a copy before you start your apartment search. Some things to look for in a lease:

  • Clauses that allow the landlord to change the terms of the lease after it is signed
  • Requirements/responsibilities of the tenants to do routine repairs such as lawn maintenance, cleaning or notification of repairs
  • Restrictions that would prevent you from living normally or comfortably in the home
  • Term of the lease and any important dates such as when the rent is due, or garbage pick up days
  • Extra fees for parking spaces or storage, garbage collection, and pets
  • Information regarding utility providers, how to arrange for service and whether you or the landlord is responsible for those bills.

Read the lease carefully and discuss anything you don't understand or issues you might have. All landlord responsibilities should be clearly stated. Always get a copy of the signed lease to keep in your records. Any clause or terms in the agreement affects ALL parties who sign.

Tenants who lease or rent property are protected against discrimination by The Fair Housing Act. If you think your rights have been violated, you may write a letter or telephone the HUD office nearest you. You have one year after the alleged violation to file a complaint with HUD, but you should file as soon as possible.

Each state has its own tenant rights, laws and protections. Contact HUD for a state-by-state directory. You can also find public housing that is available from the Department of Housing and Urban Development. The agency offers several housing assistance programs for tenants and landlords as well as information of displaced residents.

Ten Tips for Renters

  • The best way to win over a prospective landlord is to be prepared by bringing a completed rental application; written references from previous landlords, employers, friends and colleagues; and a current copy of your credit report with you.
  • Carefully review all the important conditions of the lease before you sign.
  • To avoid disputes or misunderstandings with your landlord, get everything in writing.
  • Know your rights to live in a habitable rental unit-and don't give them up.
  • Keep communication open with your landlord.
  • Ask about your privacy rights before you sign the lease.
  • Purchase renter's insurance to cover your valuables.
  • Make sure the security deposit refund procedures are spelled out in your lease or rental agreement.
  • Learn whether your building and neighborhood are safe, and what you can expect your landlord to do about it if they aren't.
  • Know when to fight an eviction notice and when to move. Unless you have the law and provable facts on your side, fighting an eviction notice is usually shortsighted.

The Can You E File 2012 Taxes Now

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