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Elderly Filing Income Tax

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Elderly Filing Income Tax

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

If you have experienced one of the following, this may be an indication your Social Security number or other personal information may have been used by another person without your permission for employment purposes.    

  1. You received a letter 4491C from the Internal Revenue Service stating that you were the victim of employment related identity theft or
  2. You received a notice from the Internal Revenue Service stating that you received wages that you did not earn or
  3. You receive a Form W-2 or 1099 from an employer for whom you did not work or
  4. You receive your annual “Notice of Earnings” statement from the Social Security Administration and the income showing on the statement is more than you have earned or
  5. Your Social Security benefits have been adjusted/denied because of wages that you did not earn

What you should do:

  • Contact the IRS at the number or fax listed on the letter or notice if you received an IRS letter or notice.
  • Contact the Social Security Administration if you received a Form W-2 from an unknown employer, your “Annual Notice of Earnings” from the Social Security Administration shows more wages than you earned or you had your Social Security benefits adjusted/denied. They will review your earnings with you to ensure their records are correct.
  • Review earnings posted to your record on your Social Security Statement. Workers, age 18 and older, may create an account to get their Statement

Additional steps you should take if you suspect that you are the victim of employment related identity theft

  • File a report with your local police department. 
  • Place a fraud alert on your credit reports by contacting any one of the three nationwide credit reporting companies: 

                        Equifax: 800-525-6285  www.equifax.com

                        Experian: 888-397-3742  www.experian.com

                        Trans Union: 800-916-8800  www.transunion.com

                            Federal Trade Commission
                            600 Pennsylvania Avenue NW
                            Washington, DC  20580  

  • Contact any banks or other financial institutions to close any accounts that are unused, have been tampered with or opened without your permission. 
  • If you have information about the identity thief that impacted your personal information negatively, file an online complaint with the Internet Crime Complaint Center (IC3). The IC3 gives victims of cyber-crime a convenient and easy-to-use reporting mechanism that alerts authorities of suspected criminal or civil violations. IC3 sends every complaint to one or more law enforcement or regulatory agencies that have jurisdiction over the matter.

If you are unable to file your tax return because another person has already filed a return under your SSN

  • You are encouraged to contact the IRS at the Identity Theft Specialized Unit (IPSU), toll free at 1-800-908-4490 so we can take steps to further secure your compromised tax account.  Assistors in this unit are specially trained in Identity Theft issues. 
  • Complete Form 14039  or Form 14039SP (Española) to report the identity theft incident, and have an identity theft indicator placed on your account to allow IRS to take protective actions.  

The IPSU hours of Operation:  Monday – Friday 7 a.m. – 7 p.m. your local time (Alaska & Hawaii follow Pacific Time)

For Additional Information

Page Last Reviewed or Updated: 07-Jan-2014

The Elderly Filing Income Tax

Elderly filing income tax Publication 598 - Introductory Material Table of Contents What's New Introduction Useful Items - You may want to see: What's New Federal tax deposits must be made by electronic funds transfer. Elderly filing income tax Beginning January 1, 2011, you must use electronic funds transfer to make all federal tax deposits. Elderly filing income tax Forms 8109 and 8109-B, Federal Tax Deposit Coupon, cannot be used after 2010. Elderly filing income tax See Federal Tax Deposits Must be Made by Electronic Funds Transfer on page 3. Elderly filing income tax For large corporations, special rules apply for estimated tax payments that are required to be made for the period that includes July, August, or September of 2012, and the period that immediately follows these months. Elderly filing income tax See the instructions for line 12 on the 2012 Form 990-W (Worksheet), Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations. Elderly filing income tax The maximum cost of a low-cost article, for organizations eligible to receive charitable contributions, was increased to $9. Elderly filing income tax 70 for 2011. Elderly filing income tax See Distribution of low-cost articles on page 8. Elderly filing income tax The annual limit on associate member dues received by an agricultural or horticultural organization not treated as gross income was increased to $148 for 2011. Elderly filing income tax See Exception under Dues of Agricultural Organizations and Business Leagues on page 10. Elderly filing income tax The IRS has created a page on IRS. Elderly filing income tax gov that includes information about Pub. Elderly filing income tax 598 at www. Elderly filing income tax irs. Elderly filing income tax gov/pub598. Elderly filing income tax Introduction An exempt organization is not taxed on its income from an activity substantially related to the charitable, educational, or other purpose that is the basis for the organization's exemption. Elderly filing income tax Such income is exempt even if the activity is a trade or business. Elderly filing income tax However, if an exempt organization regularly carries on a trade or business not substantially related to its exempt purpose, except that it provides funds to carry out that purpose, the organization is subject to tax on its income from that unrelated trade or business. Elderly filing income tax This publication covers the rules for the tax on unrelated business income of exempt organizations. Elderly filing income tax It explains: Which organizations are subject to the tax (chapter 1), What the requirements are for filing a tax return (chapter 2), What an unrelated trade or business is (chapter 3), and How to figure unrelated business taxable income (chapter 4). Elderly filing income tax All section references in this publication are to the Internal Revenue Code. Elderly filing income tax Useful Items - You may want to see: Publication 557 Tax-Exempt Status for Your Organization Form (and Instructions) 990-T Exempt Organization Business Income Tax Return See chapter 5 for information about getting these publications and forms. Elderly filing income tax Comments and suggestions. Elderly filing income tax   We welcome your comments about this publication and your suggestions for future editions. Elderly filing income tax   You can write to us at: Internal Revenue Service Individual Forms and Publications Branch SE:W:CAR:MP:T:I 1111 Constitution Ave. Elderly filing income tax NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Elderly filing income tax Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Elderly filing income tax   You can email us at taxforms@irs. Elderly filing income tax gov. Elderly filing income tax Please put “publications Comment” on the subject line. Elderly filing income tax You can also send us comments from www. Elderly filing income tax irs. Elderly filing income tax gov/formspubs/, select “Comment on Tax Forms and Publications” under “Information about. Elderly filing income tax ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Elderly filing income tax Prev  Up  Next   Home   More Online Publications