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How Can I File My 2006 Taxes

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How Can I File My 2006 Taxes

How can i file my 2006 taxes Publication 584 - Main Content Table of Contents LossesCost or other basis. How can i file my 2006 taxes Fair market value. How can i file my 2006 taxes Exception for personal-use real property. How can i file my 2006 taxes More information. How can i file my 2006 taxes Comments and SuggestionsOrdering forms and publications. How can i file my 2006 taxes Tax questions. How can i file my 2006 taxes How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). How can i file my 2006 taxes Losses Generally, you may deduct losses to your home, household goods, and motor vehicles on your federal income tax return. How can i file my 2006 taxes However, you may not deduct a casualty or theft loss that is covered by insurance unless you filed a timely insurance claim for reimbursement. How can i file my 2006 taxes Any reimbursement you receive will reduce the loss. How can i file my 2006 taxes If you did not file an insurance claim, you may deduct only the part of the loss that was not covered by insurance. How can i file my 2006 taxes Amount of loss. How can i file my 2006 taxes   You figure the amount of your loss using the following steps. How can i file my 2006 taxes Determine your cost or other basis in the property before the casualty or theft. How can i file my 2006 taxes Determine the decrease in fair market value (FMV) of the property as a result of the casualty or theft. How can i file my 2006 taxes (The decrease in FMV is the difference between the property's value immediately before and immediately after the casualty or theft. How can i file my 2006 taxes ) From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. How can i file my 2006 taxes Apply the deduction limits, discussed later, to determine the amount of your deductible loss. How can i file my 2006 taxes Cost or other basis. How can i file my 2006 taxes   Cost or other basis usually means original cost plus improvements. How can i file my 2006 taxes If you did not acquire the property by purchasing it, your basis is determined as discussed in Publication 551, Basis of Assets. How can i file my 2006 taxes If you inherited the property from someone who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. How can i file my 2006 taxes Fair market value. How can i file my 2006 taxes   FMV is the price for which you could sell your property to a willing buyer, when neither of you has to sell or buy and both of you know all the relevant facts. How can i file my 2006 taxes When filling out Schedules 1 through 20, you need to know the FMV of the property immediately before and immediately after the disaster, casualty, or theft. How can i file my 2006 taxes Separate computations. How can i file my 2006 taxes   Generally, if a single casualty or theft involves more than one item of property, you must figure the loss on each item separately. How can i file my 2006 taxes Then combine the losses to determine the total loss from that casualty or theft. How can i file my 2006 taxes Exception for personal-use real property. How can i file my 2006 taxes   In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs) is treated as one item. How can i file my 2006 taxes Figure the loss using the smaller of the following. How can i file my 2006 taxes The decrease in FMV of the entire property. How can i file my 2006 taxes The adjusted basis of the entire property. How can i file my 2006 taxes Deduction limits. How can i file my 2006 taxes   After you have figured the amount of your loss, as discussed earlier, you must figure how much of the loss you can deduct. How can i file my 2006 taxes You do this on Form 4684, section A. How can i file my 2006 taxes If the loss was to property for your personal use or your family's, there are two limits on the amount you can deduct for your casualty or theft loss. How can i file my 2006 taxes You must reduce each casualty or theft loss by $100 ($100 rule). How can i file my 2006 taxes You must further reduce the total of all your losses by 10% of your adjusted gross income (10% rule). How can i file my 2006 taxes More information. How can i file my 2006 taxes   For more information about the deduction limits, see Publication 547. How can i file my 2006 taxes When your loss is deductible. How can i file my 2006 taxes   You can generally deduct a casualty or disaster area loss only in the tax year in which the casualty or disaster occurred. How can i file my 2006 taxes You can generally deduct a theft loss only in the year you discovered your property was stolen. How can i file my 2006 taxes However, you can choose to deduct disaster area losses on your return for the year immediately before the year of the disaster if the President has declared your area a federal disaster area. How can i file my 2006 taxes For details, see Disaster Area Losses in Publication 547. How can i file my 2006 taxes Comments and Suggestions We welcome your comments about this publication and your suggestions for future editions. How can i file my 2006 taxes You can write to us at the following address: Internal Revenue Service Individual Forms and Publications Branch SE:W:CAR:MP:T:I 1111 Constitution Ave. How can i file my 2006 taxes NW, IR-6526 Washington, DC 20224 We respond to many letters by telephone. How can i file my 2006 taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. How can i file my 2006 taxes You can email us at taxforms@irs. How can i file my 2006 taxes gov. How can i file my 2006 taxes Please put “Publications Comment” on the subject line. How can i file my 2006 taxes You can also send us comments from www. How can i file my 2006 taxes irs. How can i file my 2006 taxes gov/formspubs. How can i file my 2006 taxes Select “Comment on Tax Forms and Publications” under “Information about. How can i file my 2006 taxes ” 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. How can i file my 2006 taxes Ordering forms and publications. How can i file my 2006 taxes   Visit www. How can i file my 2006 taxes irs. How can i file my 2006 taxes gov/formspubs/ to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. How can i file my 2006 taxes Internal Revenue Service 1201 N. How can i file my 2006 taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. How can i file my 2006 taxes   If you have a tax question, check the information available on IRS. How can i file my 2006 taxes gov or call 1-800-829-1040. How can i file my 2006 taxes We cannot answer tax questions sent to either of the above addresses. How can i file my 2006 taxes How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. How can i file my 2006 taxes By selecting the method that is best for you, you will have quick and easy access to tax help. How can i file my 2006 taxes Free help with your return. How can i file my 2006 taxes   Free help in preparing your return is available nationwide from IRS-certified volunteers. How can i file my 2006 taxes The Volunteer Income Tax Assistance (VITA) program is designed to help low-moderate income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. How can i file my 2006 taxes Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. How can i file my 2006 taxes To find the nearest VITA or TCE site, visit IRS. How can i file my 2006 taxes gov or call 1-800-906-9887 or 1-800-829-1040. How can i file my 2006 taxes   As part of the TCE program, AARP offers the Tax-Aide counseling program. How can i file my 2006 taxes To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website at www. How can i file my 2006 taxes aarp. How can i file my 2006 taxes org/money/taxaide. How can i file my 2006 taxes   For more information on these programs, go to IRS. How can i file my 2006 taxes gov and enter keyword “VITA” in the upper right-hand corner. How can i file my 2006 taxes Internet. How can i file my 2006 taxes You can access the IRS website at IRS. How can i file my 2006 taxes gov 24 hours a day, 7 days a week to: E-file your return. How can i file my 2006 taxes Find out about commercial tax preparation and e-file services available free to eligible taxpayers. How can i file my 2006 taxes Check the status of your 2011 refund. How can i file my 2006 taxes Go to IRS. How can i file my 2006 taxes gov and click on Where's My Refund. How can i file my 2006 taxes Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. How can i file my 2006 taxes If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). How can i file my 2006 taxes Have your 2011 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. How can i file my 2006 taxes Download forms, including talking tax forms, instructions, and publications. How can i file my 2006 taxes Order IRS products online. How can i file my 2006 taxes Research your tax questions online. How can i file my 2006 taxes Search publications online by topic or keyword. How can i file my 2006 taxes Use the online Internal Revenue Code, regulations, or other official guidance. How can i file my 2006 taxes View Internal Revenue Bulletins (IRBs) published in the last few years. How can i file my 2006 taxes Figure your withholding allowances using the withholding calculator online at www. How can i file my 2006 taxes irs. How can i file my 2006 taxes gov/individuals. How can i file my 2006 taxes Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant available online at www. How can i file my 2006 taxes irs. How can i file my 2006 taxes gov/individuals. How can i file my 2006 taxes Sign up to receive local and national tax news by email. How can i file my 2006 taxes Get information on starting and operating a small business. How can i file my 2006 taxes Phone. How can i file my 2006 taxes Many services are available by phone. How can i file my 2006 taxes   Ordering forms, instructions, and publications. How can i file my 2006 taxes Call 1-800-TAX -FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. How can i file my 2006 taxes You should receive your order within 10 days. How can i file my 2006 taxes Asking tax questions. How can i file my 2006 taxes Call the IRS with your tax questions at 1-800-829-1040. How can i file my 2006 taxes Solving problems. How can i file my 2006 taxes You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. How can i file my 2006 taxes An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. How can i file my 2006 taxes Call your local Taxpayer Assistance Center for an appointment. How can i file my 2006 taxes To find the number, go to www. How can i file my 2006 taxes irs. How can i file my 2006 taxes gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. How can i file my 2006 taxes TTY/TDD equipment. How can i file my 2006 taxes If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. How can i file my 2006 taxes TeleTax topics. How can i file my 2006 taxes Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. How can i file my 2006 taxes Refund information. How can i file my 2006 taxes To check the status of your 2011 refund, call 1-800-829-1954 or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). How can i file my 2006 taxes Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. How can i file my 2006 taxes If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). How can i file my 2006 taxes Have your 2011 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. How can i file my 2006 taxes If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. How can i file my 2006 taxes Other refund information. How can i file my 2006 taxes To check the status of a prior-year refund or amended return refund, call 1-800-829-1040. How can i file my 2006 taxes Evaluating the quality of our telephone services. How can i file my 2006 taxes To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. How can i file my 2006 taxes One method is for a second IRS representative to listen in on or record random telephone calls. How can i file my 2006 taxes Another is to ask some callers to complete a short survey at the end of the call. How can i file my 2006 taxes Walk-in. How can i file my 2006 taxes Many products and services are available on a walk-in basis. How can i file my 2006 taxes   Products. How can i file my 2006 taxes You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. How can i file my 2006 taxes Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. How can i file my 2006 taxes Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. How can i file my 2006 taxes Services. How can i file my 2006 taxes You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. How can i file my 2006 taxes An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. How can i file my 2006 taxes If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. How can i file my 2006 taxes No appointment is necessary—just walk in. How can i file my 2006 taxes If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. How can i file my 2006 taxes A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. How can i file my 2006 taxes If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. How can i file my 2006 taxes All other issues will be handled without an appointment. How can i file my 2006 taxes To find the number of your local office, go to  www. How can i file my 2006 taxes irs. How can i file my 2006 taxes gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. How can i file my 2006 taxes Mail. How can i file my 2006 taxes You can send your order for forms, instructions, and publications to the address below. How can i file my 2006 taxes You should receive a response within 10 days after your request is received. How can i file my 2006 taxes  Internal Revenue Service 1201 N. How can i file my 2006 taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Taxpayer Advocate Service. How can i file my 2006 taxes   The Taxpayer Advocate Service (TAS) is your voice at the IRS. How can i file my 2006 taxes Our job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. How can i file my 2006 taxes We offer free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. How can i file my 2006 taxes Remember, the worst thing you can do is nothing at all. How can i file my 2006 taxes   TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. How can i file my 2006 taxes You face (or your business is facing) an immediate threat of adverse action. How can i file my 2006 taxes You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. How can i file my 2006 taxes   If you qualify for our help, we’ll do everything we can to get your problem resolved. How can i file my 2006 taxes You will be assigned to one advocate who will be with you at every turn. How can i file my 2006 taxes We have offices in every state, the District of Columbia, and Puerto Rico. How can i file my 2006 taxes Although TAS is independent within the IRS, our advocates know how to work with the IRS to get your problems resolved. How can i file my 2006 taxes And our services are always free. How can i file my 2006 taxes   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. How can i file my 2006 taxes Our tax toolkit at www. How can i file my 2006 taxes TaxpayerAdvocate. How can i file my 2006 taxes irs. How can i file my 2006 taxes gov can help you understand these rights. How can i file my 2006 taxes   If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. How can i file my 2006 taxes irs. How can i file my 2006 taxes gov/advocate. How can i file my 2006 taxes You can also call our toll-free number at 1-877-777-4778 or TTY/TDD 1-800-829-4059. How can i file my 2006 taxes   TAS also handles large-scale or systemic problems that affect many taxpayers. How can i file my 2006 taxes If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. How can i file my 2006 taxes irs. How can i file my 2006 taxes gov/advocate. How can i file my 2006 taxes Low Income Taxpayer Clinics (LITCs). How can i file my 2006 taxes   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. How can i file my 2006 taxes Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. How can i file my 2006 taxes These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. How can i file my 2006 taxes Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. How can i file my 2006 taxes For more information and to find a clinic near you, see the LITC page on www. How can i file my 2006 taxes irs. How can i file my 2006 taxes gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. How can i file my 2006 taxes This publication is also available by calling 1-800-829-3676 or at your local IRS office. How can i file my 2006 taxes Free tax services. How can i file my 2006 taxes   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. How can i file my 2006 taxes Learn about free tax information from the IRS, including publications, services, and education and assistance programs. How can i file my 2006 taxes The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. How can i file my 2006 taxes The majority of the information and services listed in this publication are available to you free of charge. How can i file my 2006 taxes If there is a fee associated with a resource or service, it is listed in the publication. How can i file my 2006 taxes   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. How can i file my 2006 taxes DVD for tax products. How can i file my 2006 taxes You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. How can i file my 2006 taxes Prior-year forms, instructions, and publications. How can i file my 2006 taxes Tax Map: an electronic research tool and finding aid. How can i file my 2006 taxes Tax law frequently asked questions. How can i file my 2006 taxes Tax Topics from the IRS telephone response system. How can i file my 2006 taxes Internal Revenue Code—Title 26 of the U. How can i file my 2006 taxes S. How can i file my 2006 taxes Code. How can i file my 2006 taxes Links to other Internet based Tax Research Materials. How can i file my 2006 taxes Fill-in, print, and save features for most tax forms. How can i file my 2006 taxes Internal Revenue Bulletins. How can i file my 2006 taxes Toll-free and email technical support. How can i file my 2006 taxes Two releases during the year. How can i file my 2006 taxes  – The first release will ship the beginning of January 2012. How can i file my 2006 taxes  – The final release will ship the beginning of March 2012. How can i file my 2006 taxes Purchase the DVD from National Technical Information Service (NTIS) at www. How can i file my 2006 taxes irs. How can i file my 2006 taxes gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). How can i file my 2006 taxes Prev  Up  Next   Home   More Online Publications
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The How Can I File My 2006 Taxes

How can i file my 2006 taxes Publication 583 - Main Content Table of Contents What New Business Owners Need To Know Forms of BusinessMore information. How can i file my 2006 taxes More information. How can i file my 2006 taxes Exception—Community Income. How can i file my 2006 taxes Exception—Qualified joint venture. How can i file my 2006 taxes More information. How can i file my 2006 taxes More information. How can i file my 2006 taxes 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. How can i file my 2006 taxes 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. How can i file my 2006 taxes Table 1 can help you learn what those responsibilities are. How can i file my 2006 taxes Ask yourself each question listed in the table, then see the related discussion to find the answer. How can i file my 2006 taxes In addition to knowing about federal taxes, you need to make some basic business decisions. How can i file my 2006 taxes 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. How can i file my 2006 taxes For information on how to contact the SBA, see How to Get More Information, later. How can i file my 2006 taxes Forms of Business The most common forms of business are the sole proprietorship, partnership, and corporation. How can i file my 2006 taxes When beginning a business, you must decide which form of business to use. How can i file my 2006 taxes Legal and tax considerations enter into this decision. How can i file my 2006 taxes Only tax considerations are discussed in this publication. How can i file my 2006 taxes Your form of business determines which income tax return form you have to file. How can i file my 2006 taxes See Table 2 to find out which form you have to file. How can i file my 2006 taxes Sole proprietorships. How can i file my 2006 taxes   A sole proprietorship is an unincorporated business that is owned by one individual. How can i file my 2006 taxes It is the simplest form of business organization to start and maintain. How can i file my 2006 taxes The business has no existence apart from you, the owner. How can i file my 2006 taxes Its liabilities are your personal liabilities. How can i file my 2006 taxes You undertake the risks of the business for all assets owned, whether or not used in the business. How can i file my 2006 taxes You include the income and expenses of the business on your personal tax return. How can i file my 2006 taxes More information. How can i file my 2006 taxes   For more information on sole proprietorships, see Publication 334, Tax Guide for Small Business. How can i file my 2006 taxes If you are a farmer, see Publication 225, Farmer's Tax Guide. How can i file my 2006 taxes Partnerships. How can i file my 2006 taxes   A partnership is the relationship existing between two or more persons who join to carry on a trade or business. How can i file my 2006 taxes Each person contributes money, property, labor, or skill, and expects to share in the profits and losses of the business. How can i file my 2006 taxes   A partnership must file an annual information return to report the income, deductions, gains, losses, etc. How can i file my 2006 taxes , from its operations, but it does not pay income tax. How can i file my 2006 taxes Instead, it “passes through” any profits or losses to its partners. How can i file my 2006 taxes Each partner includes his or her share of the partnership's items on his or her tax return. How can i file my 2006 taxes More information. How can i file my 2006 taxes   For more information on partnerships, see Publication 541, Partnerships. How can i file my 2006 taxes Husband and wife business. How can i file my 2006 taxes   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. How can i file my 2006 taxes Do not use Schedule C or C-EZ. How can i file my 2006 taxes Instead, file Form 1065, U. How can i file my 2006 taxes S. How can i file my 2006 taxes Return of Partnership Income. How can i file my 2006 taxes For more information, see Publication 541, Partnerships. How can i file my 2006 taxes Exception—Community Income. How can i file my 2006 taxes   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. How can i file my 2006 taxes S. How can i file my 2006 taxes possession, you can treat the business either as a sole proprietorship or a partnership. How can i file my 2006 taxes The only states with community property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. How can i file my 2006 taxes A change in your reporting position will be treated as a conversion of the entity. How can i file my 2006 taxes Exception—Qualified joint venture. How can i file my 2006 taxes   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. How can i file my 2006 taxes 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. How can i file my 2006 taxes For an explanation of "material participation," see the Instructions for Schedule C, line G. How can i file my 2006 taxes   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. How can i file my 2006 taxes Each of you must file a separate Schedule C or C-EZ and a separate Schedule SE. How can i file my 2006 taxes For more information, see Qualified Joint Venture in the Instructions for Schedule SE. How can i file my 2006 taxes Corporations. How can i file my 2006 taxes   In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. How can i file my 2006 taxes A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. How can i file my 2006 taxes A corporation can also take special deductions. How can i file my 2006 taxes   The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. How can i file my 2006 taxes However, shareholders cannot deduct any loss of the corporation. How can i file my 2006 taxes More information. How can i file my 2006 taxes   For more information on corporations, see Publication 542, Corporations. How can i file my 2006 taxes S corporations. How can i file my 2006 taxes   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. How can i file my 2006 taxes Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income. How can i file my 2006 taxes 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. How can i file my 2006 taxes More information. How can i file my 2006 taxes   For more information on S corporations, see the instructions for Form 2553, Election by a Small Business Corporation, and Form 1120S, U. How can i file my 2006 taxes S. How can i file my 2006 taxes Income Tax Return for an S Corporation. How can i file my 2006 taxes Limited liability company. How can i file my 2006 taxes   A limited liability company (LLC) is an entity formed under state law by filing articles of organization as an LLC. How can i file my 2006 taxes The members of an LLC are not personally liable for its debts. How can i file my 2006 taxes 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. How can i file my 2006 taxes 7701-3. How can i file my 2006 taxes For more information, see the instructions for Form 8832, Entity Classification Election. How can i file my 2006 taxes Identification Numbers You must have a taxpayer identification number so the IRS can process your returns. How can i file my 2006 taxes The two most common kinds of taxpayer identification numbers are the social security number (SSN) and the employer identification number (EIN). How can i file my 2006 taxes An SSN is issued to individuals by the Social Security Administration (SSA) and is in the following format: 000–00–0000. How can i file my 2006 taxes An EIN is issued to individuals (sole proprietors), partnerships, corporations, and other entities by the IRS and is in the following format: 00–0000000. How can i file my 2006 taxes You must include your taxpayer identification number (SSN or EIN) on all returns and other documents you send to the IRS. How can i file my 2006 taxes You must also furnish your number to other persons who use your identification number on any returns or documents they send to the IRS. How can i file my 2006 taxes This includes returns or documents filed to report the following information. How can i file my 2006 taxes Interest, dividends, royalties, etc. How can i file my 2006 taxes , paid to you. How can i file my 2006 taxes Any amount paid to you as a dependent care provider. How can i file my 2006 taxes Certain other amounts paid to you that total $600 or more for the year. How can i file my 2006 taxes If you do not furnish your identification number as required, you may be subject to penalties. How can i file my 2006 taxes See Penalties, later. How can i file my 2006 taxes Employer Identification Number (EIN) EINs are used to identify the tax accounts of employers, certain sole proprietors, corporations, partnerships, estates, trusts, and other entities. How can i file my 2006 taxes 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. How can i file my 2006 taxes Applying for an EIN. How can i file my 2006 taxes   You may apply for an EIN: Online—Click on the EIN link at www. How can i file my 2006 taxes irs. How can i file my 2006 taxes gov/businesses/small. How can i file my 2006 taxes The EIN is issued immediately once the application information is validated. How can i file my 2006 taxes By telephone at 1-800-829-4933. How can i file my 2006 taxes By mailing or faxing Form SS-4, Application for Employer Identification Number. How can i file my 2006 taxes When to apply. How can i file my 2006 taxes   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. How can i file my 2006 taxes If you apply by mail, file Form SS-4 at least 4 weeks before you need an EIN. How can i file my 2006 taxes If you apply by telephone or through the IRS website, you can get an EIN immediately. How can i file my 2006 taxes If you apply by fax, you can get an EIN within 4 business days. How can i file my 2006 taxes   If you do not receive your EIN by the time a return is due, file your return anyway. How can i file my 2006 taxes Write “Applied for” and the date you applied for the number in the space for the EIN. How can i file my 2006 taxes Do not use your social security number as a substitute for an EIN on your tax returns. How can i file my 2006 taxes More than one EIN. How can i file my 2006 taxes   You should have only one EIN. How can i file my 2006 taxes 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. How can i file my 2006 taxes Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. How can i file my 2006 taxes The IRS will tell you which number to use. How can i file my 2006 taxes More information. How can i file my 2006 taxes   For more information about EINs, see Publication 1635, Understanding Your EIN. How can i file my 2006 taxes 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). How can i file my 2006 taxes The forms used to report these payments must include the payee's identification number. How can i file my 2006 taxes Employee. How can i file my 2006 taxes   If you have employees, you must get an SSN from each of them. How can i file my 2006 taxes Record the name and SSN of each employee exactly as they are shown on the employee's social security card. How can i file my 2006 taxes If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. How can i file my 2006 taxes This may occur, for example, if the employee's name has changed due to marriage or divorce. How can i file my 2006 taxes   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. How can i file my 2006 taxes This form is available at SSA offices or by calling 1-800-772-1213. How can i file my 2006 taxes It is also available from the SSA website at www. How can i file my 2006 taxes ssa. How can i file my 2006 taxes gov. How can i file my 2006 taxes Other payee. How can i file my 2006 taxes   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. How can i file my 2006 taxes If you make reportable payments to an organization, such as a corporation or partnership, you must get its EIN. How can i file my 2006 taxes   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. How can i file my 2006 taxes This form is available from IRS offices or by calling 1-800-829-3676. How can i file my 2006 taxes It is also available from the IRS website at IRS. How can i file my 2006 taxes gov. How can i file my 2006 taxes    If the payee does not provide you with an identification number, you may have to withhold part of the payments as backup withholding. How can i file my 2006 taxes For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. How can i file my 2006 taxes Tax Year You must figure your taxable income and file an income tax return based on an annual accounting period called a tax year. How can i file my 2006 taxes A tax year is usually 12 consecutive months. How can i file my 2006 taxes There are two kinds of tax years. How can i file my 2006 taxes Calendar tax year. How can i file my 2006 taxes A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. How can i file my 2006 taxes Fiscal tax year. How can i file my 2006 taxes A fiscal tax year is 12 consecutive months ending on the last day of any month except December. How can i file my 2006 taxes 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. How can i file my 2006 taxes 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. How can i file my 2006 taxes You must use a calendar tax year if: You keep no books. How can i file my 2006 taxes You have no annual accounting period. How can i file my 2006 taxes Your present tax year does not qualify as a fiscal year. How can i file my 2006 taxes You are required to use a calendar year by a provision of the Internal Revenue Code or the Income Tax Regulations. How can i file my 2006 taxes For more information, see Publication 538, Accounting Periods and Methods. How can i file my 2006 taxes First-time filer. How can i file my 2006 taxes   If you have never filed an income tax return, you can adopt either a calendar tax year or a fiscal tax year. How can i file my 2006 taxes You adopt a tax year by filing your first income tax return using that tax year. How can i file my 2006 taxes You have not adopted a tax year if you merely did any of the following. How can i file my 2006 taxes Filed an application for an extension of time to file an income tax return. How can i file my 2006 taxes Filed an application for an employer identification number. How can i file my 2006 taxes Paid estimated taxes for that tax year. How can i file my 2006 taxes Changing your tax year. How can i file my 2006 taxes   Once you have adopted your tax year, you may have to get IRS approval to change it. How can i file my 2006 taxes To get approval, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year. How can i file my 2006 taxes You may have to pay a fee. How can i file my 2006 taxes For more information, see Publication 538. How can i file my 2006 taxes Accounting Method An accounting method is a set of rules used to determine when and how income and expenses are reported. How can i file my 2006 taxes You choose an accounting method for your business when you file your first income tax return. How can i file my 2006 taxes There are two basic accounting methods. How can i file my 2006 taxes Cash method. How can i file my 2006 taxes Under the cash method, you report income in the tax year you receive it. How can i file my 2006 taxes You usually deduct or capitalize expenses in the tax year you pay them. How can i file my 2006 taxes Accrual method. How can i file my 2006 taxes 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. How can i file my 2006 taxes You deduct or capitalize expenses in the tax year you incur them, whether or not you pay them that year. How can i file my 2006 taxes For other methods, see Publication 538. How can i file my 2006 taxes If you need inventories to show income correctly, you must generally use an accrual method of accounting for purchases and sales. How can i file my 2006 taxes Inventories include goods held for sale in the normal course of business. How can i file my 2006 taxes They also include raw materials and supplies that will physically become a part of merchandise intended for sale. How can i file my 2006 taxes Inventories are explained in Publication 538. How can i file my 2006 taxes 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. How can i file my 2006 taxes For more information, see Publication 538. How can i file my 2006 taxes You must use the same accounting method to figure your taxable income and to keep your books. How can i file my 2006 taxes Also, you must use an accounting method that clearly shows your income. How can i file my 2006 taxes In general, any accounting method that consistently uses accounting principles suitable for your trade or business clearly shows income. How can i file my 2006 taxes An accounting method clearly shows income only if it treats all items of gross income and expense the same from year to year. How can i file my 2006 taxes More than one business. How can i file my 2006 taxes   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. How can i file my 2006 taxes You must keep a complete and separate set of books and records for each business. How can i file my 2006 taxes Changing your method of accounting. How can i file my 2006 taxes   Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. How can i file my 2006 taxes 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. How can i file my 2006 taxes For examples of changes that require approval and information on how to get approval for the change, see Publication 538. How can i file my 2006 taxes Business Taxes The form of business you operate determines what taxes you must pay and how you pay them. How can i file my 2006 taxes The following are the four general kinds of business taxes. How can i file my 2006 taxes Income tax. How can i file my 2006 taxes Self-employment tax. How can i file my 2006 taxes Employment taxes. How can i file my 2006 taxes Excise taxes. How can i file my 2006 taxes See Table 2 for the forms you file to report these taxes. How can i file my 2006 taxes You may want to get Publication 509. How can i file my 2006 taxes It has tax calendars that tell you when to file returns and make tax payments. How can i file my 2006 taxes Income Tax All businesses except partnerships must file an annual income tax return. How can i file my 2006 taxes Partnerships file an information return. How can i file my 2006 taxes Which form you use depends on how your business is organized. How can i file my 2006 taxes See Table 2 to find out which return you have to file. How can i file my 2006 taxes The federal income tax is a pay-as-you-go tax. How can i file my 2006 taxes You must pay the tax as you earn or receive income during the year. How can i file my 2006 taxes An employee usually has income tax withheld from his or her pay. How can i file my 2006 taxes If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. How can i file my 2006 taxes If you are not required to make estimated tax payments, you may pay any tax due when you file your return. How can i file my 2006 taxes Table 2. How can i file my 2006 taxes Which Forms Must I File? IF you are a. How can i file my 2006 taxes . How can i file my 2006 taxes . How can i file my 2006 taxes   THEN you may be liable for. How can i file my 2006 taxes . How can i file my 2006 taxes . How can i file my 2006 taxes   Use Form. How can i file my 2006 taxes . How can i file my 2006 taxes . How can i file my 2006 taxes 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. How can i file my 2006 taxes 2 Various other schedules may be needed. How can i file my 2006 taxes Estimated tax. How can i file my 2006 taxes   Generally, you must pay taxes on income, including self-employment tax (discussed next), by making regular payments of estimated tax during the year. How can i file my 2006 taxes Sole proprietors, partners, and S corporation shareholders. How can i file my 2006 taxes   You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. How can i file my 2006 taxes Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. How can i file my 2006 taxes For more information, see Publication 505, Tax Withholding and Estimated Tax. How can i file my 2006 taxes Corporations. How can i file my 2006 taxes   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. How can i file my 2006 taxes Use Form 1120-W, Estimated Tax for Corporations, to figure the estimated tax. How can i file my 2006 taxes You must deposit the payments as explained later under Depositing Taxes. How can i file my 2006 taxes For more information, see Publication 542. How can i file my 2006 taxes Self-Employment Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. How can i file my 2006 taxes Your payments of SE tax contribute to your coverage under the social security system. How can i file my 2006 taxes Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. How can i file my 2006 taxes You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. How can i file my 2006 taxes Your net earnings from self-employment were $400 or more. How can i file my 2006 taxes You had church employee income of $108. How can i file my 2006 taxes 28 or more. How can i file my 2006 taxes Use Schedule SE (Form 1040) to figure your SE tax. How can i file my 2006 taxes For more information, see Publication 334, Tax Guide for Small Business. How can i file my 2006 taxes You can deduct a portion of your SE tax as an adjustment to income on your Form 1040. How can i file my 2006 taxes The Social Security Administration (SSA) time limit for posting self-employment income. How can i file my 2006 taxes   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. How can i file my 2006 taxes 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. How can i file my 2006 taxes The SSA will not change its records to increase your self-employment income. How can i file my 2006 taxes 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. How can i file my 2006 taxes Employment taxes include the following. How can i file my 2006 taxes Social security and Medicare taxes. How can i file my 2006 taxes Federal income tax withholding. How can i file my 2006 taxes Federal unemployment (FUTA) tax. How can i file my 2006 taxes If you have employees, you will need to get Publication 15, Circular E, Employer's Tax Guide. How can i file my 2006 taxes If you have agricultural employees, get Publication 51, Circular A, Agricultural Employer's Tax Guide. How can i file my 2006 taxes These publications explain your tax responsibilities as an employer. How can i file my 2006 taxes If you are not sure whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. How can i file my 2006 taxes That publication has information to help you determine whether an individual is an employee or an independent contractor. How can i file my 2006 taxes If you classify an employee as an independent contractor, you can be held liable for employment taxes for that worker plus a penalty. How can i file my 2006 taxes An independent contractor is someone who is self-employed. How can i file my 2006 taxes Generally, you do not have to withhold or pay any taxes on payments to an independent contractor. How can i file my 2006 taxes Federal Income, Social Security, and Medicare Taxes You generally must withhold federal income tax from your employee's wages. How can i file my 2006 taxes 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. How can i file my 2006 taxes Social security and Medicare taxes pay for benefits that workers and their families receive under the Federal Insurance Contributions Act (FICA). How can i file my 2006 taxes Social security tax pays for benefits under the old-age, survivors, and disability insurance part of FICA. How can i file my 2006 taxes Medicare tax pays for benefits under the hospital insurance part of FICA. How can i file my 2006 taxes You withhold part of these taxes from your employee's wages and you pay a part yourself. How can i file my 2006 taxes To find out how much social security and Medicare tax to withhold and to pay, see Publication 15. How can i file my 2006 taxes 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. How can i file my 2006 taxes (Farm employers use Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. How can i file my 2006 taxes ) 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. How can i file my 2006 taxes You report and pay FUTA tax separately from social security and Medicare taxes and withheld income tax. How can i file my 2006 taxes You pay FUTA tax only from your own funds. How can i file my 2006 taxes Employees do not pay this tax or have it withheld from their pay. How can i file my 2006 taxes Which form do I file?   Report federal unemployment tax on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. How can i file my 2006 taxes See Publication 15 to find out if you can use this form. How can i file my 2006 taxes Hiring Employees Have the employees you hire fill out Form I-9 and Form W-4. How can i file my 2006 taxes Form I-9. How can i file my 2006 taxes   You must verify that each new employee is legally eligible to work in the United States. How can i file my 2006 taxes Both you and the employee must complete the U. How can i file my 2006 taxes S. How can i file my 2006 taxes Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. How can i file my 2006 taxes You can get the form from USCIS offices or from the USCIS website at www. How can i file my 2006 taxes uscis. How can i file my 2006 taxes gov. How can i file my 2006 taxes Call the USCIS at 1-800-375-5283 for more information about your responsibilities. How can i file my 2006 taxes Form W-4. How can i file my 2006 taxes   Each employee must fill out Form W-4, Employee's Withholding Allowance Certificate. How can i file my 2006 taxes 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. How can i file my 2006 taxes For more information, see Publication 15. How can i file my 2006 taxes Employees claiming more than 10 withholding allowances. How can i file my 2006 taxes   An employer of an employee who claims more than 10 withholding allowances for wages paid can use several methods of withholding. How can i file my 2006 taxes See section 16 of Publication 15. How can i file my 2006 taxes 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. How can i file my 2006 taxes You must also send copies to the Social Security Administration. How can i file my 2006 taxes See Information Returns, later, for more information on Form W-2. How can i file my 2006 taxes 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. How can i file my 2006 taxes Manufacture or sell certain products. How can i file my 2006 taxes Operate certain kinds of businesses. How can i file my 2006 taxes Use various kinds of equipment, facilities, or products. How can i file my 2006 taxes Receive payment for certain services. How can i file my 2006 taxes For more information on excise taxes, see Publication 510, Excise Taxes. How can i file my 2006 taxes Form 720. How can i file my 2006 taxes   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. How can i file my 2006 taxes Environmental taxes. How can i file my 2006 taxes Communications and air transportation taxes. How can i file my 2006 taxes Fuel taxes. How can i file my 2006 taxes Tax on the first retail sale of heavy trucks, trailers, and tractors. How can i file my 2006 taxes Manufacturers taxes on the sale or use of a variety of different articles. How can i file my 2006 taxes Form 2290. How can i file my 2006 taxes   There is a federal excise tax on certain trucks, truck tractors, and buses used on public highways. How can i file my 2006 taxes The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. How can i file my 2006 taxes Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. How can i file my 2006 taxes For more information, see the instructions for Form 2290. How can i file my 2006 taxes Form 730. How can i file my 2006 taxes   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. How can i file my 2006 taxes Use Form 730, Monthly Tax Return for Wagers, to figure the tax on the wagers you receive. How can i file my 2006 taxes Form 11-C. How can i file my 2006 taxes   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. How can i file my 2006 taxes Depositing Taxes You generally have to deposit employment taxes, certain excise taxes, corporate income tax, and S corporation taxes before you file your return. How can i file my 2006 taxes Generally, taxpayers are required to deposit taxes through the Electronic Federal Tax Payment System (EFTPS). How can i file my 2006 taxes Any business that has a federal tax obligation and requests a new EIN will automatically be enrolled in EFTPS. How can i file my 2006 taxes Through the mail, the business will receive an EFTPS PIN package that contains instructions for activating its EFTPS enrollment. How can i file my 2006 taxes Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. How can i file my 2006 taxes 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. How can i file my 2006 taxes You must give a copy of each information return you are required to file to the recipient or payer. How can i file my 2006 taxes In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. How can i file my 2006 taxes For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. How can i file my 2006 taxes Form 1099-MISC. How can i file my 2006 taxes   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your trade or business. How can i file my 2006 taxes These payments include the following items. How can i file my 2006 taxes 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. How can i file my 2006 taxes Rent payments of $600 or more, other than rents paid to real estate agents. How can i file my 2006 taxes Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. How can i file my 2006 taxes Royalty payments of $10 or more. How can i file my 2006 taxes Payments to certain crew members by operators of fishing boats. How can i file my 2006 taxes 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. How can i file my 2006 taxes Form W-2. How can i file my 2006 taxes   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. How can i file my 2006 taxes For more information on what to report on Form W-2, see the Instructions for Forms W-2 and W-3. How can i file my 2006 taxes Form 8300. How can i file my 2006 taxes   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. How can i file my 2006 taxes Cash includes U. How can i file my 2006 taxes S. How can i file my 2006 taxes and foreign coin and currency. How can i file my 2006 taxes It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. How can i file my 2006 taxes For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). How can i file my 2006 taxes Penalties The law provides penalties for not filing returns or paying taxes as required. How can i file my 2006 taxes Criminal penalties may be imposed for willful failure to file, tax evasion, or making a false statement. How can i file my 2006 taxes Failure to file tax returns. How can i file my 2006 taxes   If you do not file your tax return by the due date, you may have to pay a penalty. How can i file my 2006 taxes The penalty is based on the tax not paid by the due date. How can i file my 2006 taxes See your tax return instructions for more information about this penalty. How can i file my 2006 taxes Failure to pay tax. How can i file my 2006 taxes   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. How can i file my 2006 taxes For more information, see your tax return instructions. How can i file my 2006 taxes Failure to withhold, deposit, or pay taxes. How can i file my 2006 taxes   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. How can i file my 2006 taxes You may also be subject to penalties if you deposit the taxes late. How can i file my 2006 taxes For more information, see Publication 15. How can i file my 2006 taxes Failure to follow information reporting requirements. How can i file my 2006 taxes   The following penalties apply if you are required to file information returns. How can i file my 2006 taxes For more information, see the General Instructions for Certain Information Returns. How can i file my 2006 taxes Failure to file information returns. How can i file my 2006 taxes 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. How can i file my 2006 taxes Failure to furnish correct payee statements. How can i file my 2006 taxes 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. How can i file my 2006 taxes Waiver of penalty. How can i file my 2006 taxes   These penalties will not apply if you can show that the failures were due to reasonable cause and not willful neglect. How can i file my 2006 taxes   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. How can i file my 2006 taxes (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. How can i file my 2006 taxes ) Failure to supply taxpayer identification number. How can i file my 2006 taxes   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. How can i file my 2006 taxes 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. How can i file my 2006 taxes Business Expenses You can deduct business expenses on your income tax return. How can i file my 2006 taxes These are the current operating costs of running your business. How can i file my 2006 taxes To be deductible, a business expense must be both ordinary and necessary. How can i file my 2006 taxes An ordinary expense is one that is common and accepted in your field of business, trade, or profession. How can i file my 2006 taxes A necessary expense is one that is helpful and appropriate for your business, trade, or profession. How can i file my 2006 taxes An expense does not have to be indispensable to be considered necessary. How can i file my 2006 taxes The following are brief explanations of some expenses that are of interest to people starting a business. How can i file my 2006 taxes There are many other expenses that you may be able to deduct. How can i file my 2006 taxes See your form instructions and Publication 535, Business Expenses. How can i file my 2006 taxes Business Start-Up Costs Business start-up costs are the expenses you incur before you actually begin business operations. How can i file my 2006 taxes Your business start-up costs will depend on the type of business you are starting. How can i file my 2006 taxes They may include costs for advertising, travel, surveys, and training. How can i file my 2006 taxes These costs are generally capital expenses. How can i file my 2006 taxes You usually recover costs for a particular asset (such as machinery or office equipment) through depreciation (discussed next). How can i file my 2006 taxes 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. How can i file my 2006 taxes The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. How can i file my 2006 taxes Any remaining cost must be amortized. How can i file my 2006 taxes For more information about amortizing start-up and organizational costs, see chapter 7 in Publication 535. How can i file my 2006 taxes 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. How can i file my 2006 taxes You must spread the cost over more than one tax year and deduct part of it each year. How can i file my 2006 taxes This method of deducting the cost of business property is called depreciation. How can i file my 2006 taxes Business property you must depreciate includes the following items. How can i file my 2006 taxes Office furniture. How can i file my 2006 taxes Buildings. How can i file my 2006 taxes Machinery and equipment. How can i file my 2006 taxes You can choose to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. How can i file my 2006 taxes This deduction is known as the “section 179 deduction. How can i file my 2006 taxes ” For more information about depreciation and the section 179 deduction, see Publication 946, How To Depreciate Property. How can i file my 2006 taxes Depreciation must be taken in the year it is allowable. How can i file my 2006 taxes Allowable depreciation not taken in a prior year cannot be taken in the current year. How can i file my 2006 taxes If you do not deduct the correct depreciation, you may be able to make a correction by filing Form 1040X, Amended U. How can i file my 2006 taxes S. How can i file my 2006 taxes Individual Income Tax Return, or by changing your accounting method. How can i file my 2006 taxes For more information on how to correct depreciation deductions, see chapter 1 in Publication 946. How can i file my 2006 taxes Business Use of Your Home To deduct expenses related to the business use of part of your home, you must meet specific requirements. How can i file my 2006 taxes Even then, your deduction may be limited. How can i file my 2006 taxes To qualify to claim expenses for business use of your home, you must meet both the following tests. How can i file my 2006 taxes 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. How can i file my 2006 taxes Exclusive use. How can i file my 2006 taxes   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. How can i file my 2006 taxes The area used for business can be a room or other separately identifiable space. How can i file my 2006 taxes The space does not need to be marked off by a permanent partition. How can i file my 2006 taxes   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. How can i file my 2006 taxes Exceptions to exclusive use. How can i file my 2006 taxes   You do not have to meet the exclusive use test if either of the following applies. How can i file my 2006 taxes You use part of your home for the storage of inventory or product samples. How can i file my 2006 taxes You use part of your home as a daycare facility. How can i file my 2006 taxes For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). How can i file my 2006 taxes Principal place of business. How can i file my 2006 taxes   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. How can i file my 2006 taxes You use it exclusively and regularly for administrative or management activities of your trade or business. How can i file my 2006 taxes You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. How can i file my 2006 taxes   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. How can i file my 2006 taxes The relative importance of the activities performed at each location. How can i file my 2006 taxes If the relative importance factor does not determine your principal place of business, the time spent at each location. How can i file my 2006 taxes    If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. How can i file my 2006 taxes However, for other ways to qualify to deduct home office expenses, see Publication 587. How can i file my 2006 taxes 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. How can i file my 2006 taxes If you file Schedule F (Form 1040) or you are a partner, you can use the worksheet in Publication 587. How can i file my 2006 taxes More information. How can i file my 2006 taxes   For more information about business use of your home, see Publication 587. How can i file my 2006 taxes Car and Truck Expenses If you use your car or truck in your business, you can deduct the costs of operating and maintaining it. How can i file my 2006 taxes You generally can deduct either your actual expenses or the standard mileage rate. How can i file my 2006 taxes Actual expenses. How can i file my 2006 taxes   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. How can i file my 2006 taxes You can divide your expenses based on the miles driven for each purpose. How can i file my 2006 taxes Example. How can i file my 2006 taxes You are the sole proprietor of a flower shop. How can i file my 2006 taxes You drove your van 20,000 miles during the year. How can i file my 2006 taxes 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use. How can i file my 2006 taxes You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. How can i file my 2006 taxes Standard mileage rate. How can i file my 2006 taxes   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. How can i file my 2006 taxes You can use the standard mileage rate for a vehicle you own or lease. How can i file my 2006 taxes The standard mileage rate is a specified amount of money you can deduct for each business mile you drive. How can i file my 2006 taxes It is announced annually by the IRS. How can i file my 2006 taxes To figure your deduction, multiply your business miles by the standard mileage rate for the year. How can i file my 2006 taxes    Generally, if you use the standard mileage rate, you cannot deduct your actual expenses. How can i file my 2006 taxes However, you may be able to deduct business-related parking fees, tolls, interest on your car loan, and certain state and local taxes. How can i file my 2006 taxes Choosing the standard mileage rate. How can i file my 2006 taxes   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. How can i file my 2006 taxes In later years, you can choose to use either the standard mileage rate or actual expenses. How can i file my 2006 taxes   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). How can i file my 2006 taxes Additional information. How can i file my 2006 taxes   For more information about the rules for claiming car and truck expenses, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. How can i file my 2006 taxes Recordkeeping This part explains why you must keep records, what kinds of records you must keep, and how to keep them. How can i file my 2006 taxes It also explains how long you must keep your records for federal tax purposes. How can i file my 2006 taxes A sample recordkeeping system is illustrated at the end of this part. How can i file my 2006 taxes Why Keep Records? Everyone in business must keep records. How can i file my 2006 taxes Good records will help you do the following. How can i file my 2006 taxes Monitor the progress of your business. How can i file my 2006 taxes   You need good records to monitor the progress of your business. How can i file my 2006 taxes Records can show whether your business is improving, which items are selling, or what changes you need to make. How can i file my 2006 taxes Good records can increase the likelihood of business success. How can i file my 2006 taxes Prepare your financial statements. How can i file my 2006 taxes   You need good records to prepare accurate financial statements. How can i file my 2006 taxes These include income (profit and loss) statements and balance sheets. How can i file my 2006 taxes These statements can help you in dealing with your bank or creditors and help you manage your business. How can i file my 2006 taxes An income statement shows the income and expenses of the business for a given period of time. How can i file my 2006 taxes A balance sheet shows the assets, liabilities, and your equity in the business on a given date. How can i file my 2006 taxes Identify source of receipts. How can i file my 2006 taxes   You will receive money or property from many sources. How can i file my 2006 taxes Your records can identify the source of your receipts. How can i file my 2006 taxes You need this information to separate business from nonbusiness receipts and taxable from nontaxable income. How can i file my 2006 taxes Keep track of deductible expenses. How can i file my 2006 taxes   You may forget expenses when you prepare your tax return unless you record them when they occur. How can i file my 2006 taxes Prepare your tax returns. How can i file my 2006 taxes   You need good records to prepare your tax returns. How can i file my 2006 taxes These records must support the income, expenses, and credits you report. How can i file my 2006 taxes Generally, these are the same records you use to monitor your business and prepare your financial statements. How can i file my 2006 taxes Support items reported on tax returns. How can i file my 2006 taxes   You must keep your business records available at all times for inspection by the IRS. How can i file my 2006 taxes If the IRS examines any of your tax returns, you may be asked to explain the items reported. How can i file my 2006 taxes A complete set of records will speed up the examination. How can i file my 2006 taxes Kinds of Records To Keep Except in a few cases, the law does not require any specific kind of records. How can i file my 2006 taxes You can choose any recordkeeping system suited to your business that clearly shows your income and expenses. How can i file my 2006 taxes The business you are in affects the type of records you need to keep for federal tax purposes. How can i file my 2006 taxes You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. How can i file my 2006 taxes See Accounting Method, earlier. How can i file my 2006 taxes If you are in more than one business, you should keep a complete and separate set of records for each business. How can i file my 2006 taxes A corporation should keep minutes of board of directors' meetings. How can i file my 2006 taxes Your recordkeeping system should include a summary of your business transactions. How can i file my 2006 taxes This summary is ordinarily made in your books (for example, accounting journals and ledgers). How can i file my 2006 taxes Your books must show your gross income, as well as your deductions and credits. How can i file my 2006 taxes For most small businesses, the business checkbook (discussed later) is the main source for entries in the business books. How can i file my 2006 taxes In addition, you must keep supporting documents, explained later. How can i file my 2006 taxes Electronic records. How can i file my 2006 taxes   All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. How can i file my 2006 taxes 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. How can i file my 2006 taxes 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. How can i file my 2006 taxes The electronic storage system must index, store, preserve, retrieve and reproduce the electronically stored books and records in legible format. How can i file my 2006 taxes All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. How can i file my 2006 taxes Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. How can i file my 2006 taxes   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. How can i file my 2006 taxes You still have the responsibility of retaining any other books and records that are required to be retained. How can i file my 2006 taxes   The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. How can i file my 2006 taxes This test is not considered an examination and the results must be shared with you. How can i file my 2006 taxes If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. How can i file my 2006 taxes 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. How can i file my 2006 taxes For details on electronic storage system requirements, see Revenue Procedure 97-22, available in Internal Revenue Bulletin 1997-13. How can i file my 2006 taxes Supporting Documents Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. How can i file my 2006 taxes Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks. How can i file my 2006 taxes These documents contain information you need to record in your books. How can i file my 2006 taxes It is important to keep these documents because they support the entries in your books and on your tax return. How can i file my 2006 taxes Keep them in an orderly fashion and in a safe place. How can i file my 2006 taxes For instance, organize them by year and type of income or expense. How can i file my 2006 taxes Gross receipts. How can i file my 2006 taxes   Gross receipts are the income you receive from your business. How can i file my 2006 taxes You should keep supporting documents that show the amounts and sources of your gross receipts. How can i file my 2006 taxes Documents that show gross receipts include the following. How can i file my 2006 taxes Cash register tapes. How can i file my 2006 taxes Bank deposit slips. How can i file my 2006 taxes Receipt books. How can i file my 2006 taxes Invoices. How can i file my 2006 taxes Credit card charge slips. How can i file my 2006 taxes Forms 1099-MISC. How can i file my 2006 taxes Purchases. How can i file my 2006 taxes   Purchases are the items you buy and resell to customers. How can i file my 2006 taxes If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into finished products. How can i file my 2006 taxes Your supporting documents should show the amount paid and that the amount was for purchases. How can i file my 2006 taxes Documents for purchases include the following. How can i file my 2006 taxes Canceled checks. How can i file my 2006 taxes Cash register tape receipts. How can i file my 2006 taxes Credit card sales slips. How can i file my 2006 taxes Invoices. How can i file my 2006 taxes These records will help you determine the value of your inventory at the end of the year. How can i file my 2006 taxes See Publication 538 for information on methods for valuing inventory. How can i file my 2006 taxes Expenses. How can i file my 2006 taxes   Expenses are the costs you incur (other than purchases) to carry on your business. How can i file my 2006 taxes Your supporting documents should show the amount paid and that the amount was for a business expense. How can i file my 2006 taxes Documents for expenses include the following. How can i file my 2006 taxes Canceled checks. How can i file my 2006 taxes Cash register tapes. How can i file my 2006 taxes Account statements. How can i file my 2006 taxes Credit card sales slips. How can i file my 2006 taxes Invoices. How can i file my 2006 taxes Petty cash slips for small cash payments. How can i file my 2006 taxes    A petty cash fund allows you to make small payments without having to write checks for small amounts. How can i file my 2006 taxes 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. How can i file my 2006 taxes Travel, transportation, entertainment, and gift expenses. How can i file my 2006 taxes   Specific recordkeeping rules apply to these expenses. How can i file my 2006 taxes For more information, see Publication 463. How can i file my 2006 taxes Employment taxes. How can i file my 2006 taxes   There are specific employment tax records you must keep. How can i file my 2006 taxes For a list, see Publication 15. How can i file my 2006 taxes Assets. How can i file my 2006 taxes   Assets are the property, such as machinery and furniture you own and use in your business. How can i file my 2006 taxes You must keep records to verify certain information about your business assets. How can i file my 2006 taxes You need records to figure the annual depreciation and the gain or loss when you sell the assets. How can i file my 2006 taxes Your records should show the following information. How can i file my 2006 taxes When and how you acquired the asset. How can i file my 2006 taxes Purchase price. How can i file my 2006 taxes Cost of any improvements. How can i file my 2006 taxes Section 179 deduction taken. How can i file my 2006 taxes Deductions taken for depreciation. How can i file my 2006 taxes Deductions taken for casualty losses, such as losses resulting from fires or storms. How can i file my 2006 taxes How you used the asset. How can i file my 2006 taxes When and how you disposed of the asset. How can i file my 2006 taxes Selling price. How can i file my 2006 taxes Expenses of sale. How can i file my 2006 taxes   The following documents may show this information. How can i file my 2006 taxes Purchase and sales invoices. How can i file my 2006 taxes Real estate closing statements. How can i file my 2006 taxes Canceled checks. How can i file my 2006 taxes 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. How can i file my 2006 taxes These include account statements prepared for the financial institution by a third party. How can i file my 2006 taxes These account statements must be highly legible. How can i file my 2006 taxes The following table lists acceptable account statements. How can i file my 2006 taxes  IF payment is by. How can i file my 2006 taxes . How can i file my 2006 taxes . How can i file my 2006 taxes THEN the statement must show the. How can i file my 2006 taxes . How can i file my 2006 taxes . How can i file my 2006 taxes Check Check number. How can i file my 2006 taxes Amount. How can i file my 2006 taxes Payee's name. How can i file my 2006 taxes Date the check amount was posted to the account by the financial institution. How can i file my 2006 taxes Electronic funds transfer Amount transferred. How can i file my 2006 taxes Payee's name. How can i file my 2006 taxes Date the transfer was posted to the account by the financial institution. How can i file my 2006 taxes Credit card Amount charged. How can i file my 2006 taxes Payee's name. How can i file my 2006 taxes Transaction date. How can i file my 2006 taxes    Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. How can i file my 2006 taxes You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost. How can i file my 2006 taxes Recording Business Transactions A good recordkeeping system includes a summary of your business transactions. How can i file my 2006 taxes (Your business transactions are shown on the supporting documents just discussed. How can i file my 2006 taxes ) Business transactions are ordinarily summarized in books called journals and ledgers. How can i file my 2006 taxes You can buy them at your local stationery or office supply store. How can i file my 2006 taxes A journal is a book where you record each business transaction shown on your supporting documents. How can i file my 2006 taxes You may have to keep separate journals for transactions that occur frequently. How can i file my 2006 taxes A ledger is a book that contains the totals from all of your journals. How can i file my 2006 taxes It is organized into different accounts. How can i file my 2006 taxes Whether you keep journals and ledgers and how you keep them depends on the type of business you are in. How can i file my 2006 taxes For example, a recordkeeping system for a small business might include the following items. How can i file my 2006 taxes Business checkbook. How can i file my 2006 taxes Daily summary of cash receipts. How can i file my 2006 taxes Monthly summary of cash receipts. How can i file my 2006 taxes Check disbursements journal. How can i file my 2006 taxes Depreciation worksheet. How can i file my 2006 taxes Employee compensation record. How can i file my 2006 taxes The business checkbook is explained next. How can i file my 2006 taxes The other items are illustrated later under Sample Record System. How can i file my 2006 taxes The system you use to record business transactions will be more effective if you follow good recordkeeping practices. How can i file my 2006 taxes For example, record expenses when they occur, and identify the source of recorded receipts. How can i file my 2006 taxes Generally, it is best to record transactions on a daily basis. How can i file my 2006 taxes Business checkbook. How can i file my 2006 taxes   One of the first things you should do when you start a business is open a business checking account. How can i file my 2006 taxes You should keep your business account separate from your personal checking account. How can i file my 2006 taxes   The business checkbook is your basic source of information for recording your business expenses. How can i file my 2006 taxes You should deposit all daily receipts in your business checking account. How can i file my 2006 taxes You should check your account for errors by reconciling it. How can i file my 2006 taxes See Reconciling the checking account, later. How can i file my 2006 taxes   Consider using a checkbook that allows enough space to identify the source of deposits as business income, personal funds, or loans. How can i file my 2006 taxes You should also note on the deposit slip the source of the deposit and keep copies of all slips. How can i file my 2006 taxes   You should make all payments by check to document business expenses. How can i file my 2006 taxes Write checks payable to yourself only when making withdrawals from your business for personal use. How can i file my 2006 taxes Avoid writing checks payable to cash. How can i file my 2006 taxes If you must write a check for cash to pay a business expense, include the receipt for the cash payment in your records. How can i file my 2006 taxes If you cannot get a receipt for a cash payment, you should make an adequate explanation in your records at the time of payment. How can i file my 2006 taxes    Use the business account for business purposes only. How can i file my 2006 taxes Indicate the source of deposits and the type of expense in the checkbook. How can i file my 2006 taxes Reconciling the checking account. How can i file my 2006 taxes   When you receive your bank statement, make sure the statement, your checkbook, and your books agree. How can i file my 2006 taxes 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. How can i file my 2006 taxes   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. How can i file my 2006 taxes    You should reconcile your checking account each month. How can i file my 2006 taxes     Before you reconcile your monthly bank statement, check your own figures. How can i file my 2006 taxes Begin with the balance shown in your checkbook at the end of the previous month. How can i file my 2006 taxes To this balance, add the total cash deposited during the month and subtract the total cash disbursements. How can i file my 2006 taxes   After checking your figures, the result should agree with your checkbook balance at the end of the month. How can i file my 2006 taxes If the result does not agree, you may have made an error in recording a check or deposit. How can i file my 2006 taxes You can find the error by doing the following. How can i file my 2006 taxes 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. How can i file my 2006 taxes 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. How can i file my 2006 taxes Adding the deposit amounts in your checkbook. How can i file my 2006 taxes Compare that total with the monthly total in your cash receipt book, if you have one. How can i file my 2006 taxes If the totals do not agree, check the individual amounts to find any errors. How can i file my 2006 taxes   If your checkbook and journal entries still disagree, then refigure the running balance in your checkbook to make sure additions and subtractions are correct. How can i file my 2006 taxes   When your checkbook balance agrees with the balance figured from the journal entries, you may begin reconciling your checkbook with the bank statement. How can i file my 2006 taxes Many banks print a reconciliation worksheet on the back of the statement. How can i file my 2006 taxes   To reconcile your account, follow these steps. How can i file my 2006 taxes Compare the deposits listed on the bank statement with the deposits shown in your checkbook. How can i file my 2006 taxes Note all differences in the dollar amounts. How can i file my 2006 taxes Compare each canceled check, including both check number and dollar amount, with the entry in your checkbook. How can i file my 2006 taxes Note all differences in the dollar amounts. How can i file my 2006 taxes Mark the check number in the checkbook as having cleared the bank. How can i file my 2006 taxes After accounting for all checks returned by the bank, those not marked in your checkbook are your outstanding checks. How can i file my 2006 taxes Prepare a bank reconciliation. How can i file my 2006 taxes One is illustrated later under Sample Record System. How can i file my 2006 taxes Update your checkbook and journals for items shown on the reconciliation as not recorded (such as service charges) or recorded incorrectly. How can i file my 2006 taxes At this point, the adjusted bank statement balance should equal your adjusted checkbook balance. How can i file my 2006 taxes If you still have differences, check the previous steps to find the errors. How can i file my 2006 taxes   Table 3. How can i file my 2006 taxes Period of Limitations IF you. How can i file my 2006 taxes . How can i file my 2006 taxes . How can i file my 2006 taxes   THEN the period is. How can i file my 2006 taxes . How can i file my 2006 taxes . How can i file my 2006 taxes 1. How can i file my 2006 taxes Owe additional tax and situations (2), (3), and (4), below, do not apply to you   3 years 2. How can i file my 2006 taxes 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. How can i file my 2006 taxes File a fraudulent return   Not limited 4. How can i file my 2006 taxes Do not file a return   Not limited 5. How can i file my 2006 taxes File a claim for credit or refund after you filed your return   Later of: 3 years or  2 years after tax   was paid 6. How can i file my 2006 taxes 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. How can i file my 2006 taxes The single-entry system of bookkeeping is the simplest to maintain, but it may not be suitable for everyone. How can i file my 2006 taxes You may find the double-entry system better because it has built-in checks and balances to assure accuracy and control. How can i file my 2006 taxes Single-entry. How can i file my 2006 taxes   A single-entry system is based on the income statement (profit or loss statement). How can i file my 2006 taxes It can be a simple and practical system if you are starting a small business. How can i file my 2006 taxes 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. How can i file my 2006 taxes Double-entry. How can i file my 2006 taxes   A double-entry bookkeeping system uses journals and ledgers. How can i file my 2006 taxes Transactions are first entered in a journal and then posted to ledger accounts. How can i file my 2006 taxes These accounts show income, expenses, assets (property a business owns), liabilities (debts of a business), and net worth (excess of assets over liabilities). How can i file my 2006 taxes You close income and expense accounts at the end of each tax year. How can i file my 2006 taxes You keep asset, liability, and net worth accounts open on a permanent basis. How can i file my 2006 taxes   In the double-entry system, each account has a left side for debits and a right side for credits. How can i file my 2006 taxes It is self-balancing because you record every transaction as a debit entry in one account and as a credit entry in another. How can i file my 2006 taxes   Under this system, the total debits must equal the total credits after you post the journal entries to the ledger accounts. How can i file my 2006 taxes If the amounts do not balance, you have made an error and you must find and correct it. How can i file my 2006 taxes   An example of a journal entry exhibiting a payment of rent in October is shown next. How can i file my 2006 taxes General Journal Date Description of Entry Debit  Credit Oct. How can i file my 2006 taxes 5 Rent expense 780. How can i file my 2006 taxes 00     Cash   780. How can i file my 2006 taxes 00                 Computerized System There are computer software packages you can use for recordkeeping. How can i file my 2006 taxes They can be purchased in many retail stores. How can i file my 2006 taxes These packages are very helpful and relatively easy to use; they require very little knowledge of bookkeeping and accounting. How can i file my 2006 taxes 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. How can i file my 2006 taxes To meet this qualification, the machine-sensible records must reconcile with your books and return. How can i file my 2006 taxes These records must provide enough detail to identify the underlying source documents. How can i file my 2006 taxes You must also keep all machine-sensible records and a complete description of the computerized portion of your recordkeeping system. How can i file my 2006 taxes This documentation must be sufficiently detailed to show all of the following items. How can i file my 2006 taxes Functions being performed as the data flows through the system. How can i file my 2006 taxes Controls used to ensure accurate and reliable processing. How can i file my 2006 taxes Controls used to prevent the unauthorized addition, alteration, or deletion of retained records. How can i file my 2006 taxes Charts of accounts and detailed account descriptions. How can i file my 2006 taxes See Revenue Procedure 98-25 in Cumulative Bulletin 1998-1 for more information. How can i file my 2006 taxes 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. How can i file my 2006 taxes 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. How can i file my 2006 taxes 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. How can i file my 2006 taxes Table 3 contains the periods of limitations that apply to income tax returns. How can i file my 2006 taxes Unless otherwise stated, the years refer to the period after the return was filed. How can i file my 2006 taxes Returns filed before the due date are treated as filed on the due date. How can i file my 2006 taxes Keep copies of your filed tax returns. How can i file my 2006 taxes They help in preparing future tax returns and making computations if you file an amended return. How can i file my 2006 taxes Employment taxes. How can i file my 2006 taxes   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. How can i file my 2006 taxes For more information about recordkeeping for employment taxes, see Publication 15. How can i file my 2006 taxes Assets. How can i file my 2006 taxes   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. How can i file my 2006 taxes 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. How can i file my 2006 taxes   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. How can i file my 2006 taxes 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. How can i file my 2006 taxes Records for nontax purposes. How can i file my 2006 taxes   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. How can i file my 2006 taxes For example, your insurance company or creditors may require you to keep them longer than the IRS does. How can i file my 2006 taxes 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. How can i file my 2006 taxes Henry uses part-time help, has no inventory of items held for sale, and uses the cash method of accounting. How can i file my 2006 taxes These sample records should not be viewed as a recommendation of how to keep your records. How can i file my 2006 taxes They are intended only to show how one business keeps its records. How can i file my 2006 taxes 1. How can i file my 2006 taxes Daily Summary of Cash Receipts This summary is a record of cash sales for the day. How can i file my 2006 taxes 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. How can i file my 2006 taxes Henry takes the cash sales entry from his cash register tape. How can i file my 2006 taxes If he had no cash register, he would simply total his cash sale slips and any other cash received that day. How can i file my 2006 taxes He carries the total receipts shown in this summary for January 3 ($267. How can i file my 2006 taxes 80), including cash sales ($263. How can i file my 2006 taxes 60) and sales tax ($4. How can i file my 2006 taxes 20), to the Monthly Summary of Cash Receipts. How can i file my 2006 taxes Petty cash fund. How can i file my 2006 taxes   Henry uses a petty cash fund to make small payments without having to write checks for small amounts. How can i file my 2006 taxes 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. How can i file my 2006 taxes He sets up a fixed amount ($50) in his petty cash fund. How can i file my 2006 taxes The total of the unspent petty cash and the amounts on the petty cash slips should equal the fixed amount of the fund. How can i file my 2006 taxes 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. How can i file my 2006 taxes (See the Check Disbursements Journal entry for check number 92. How can i file my 2006 taxes ) This restores the fund to its fixed amount of $50. How can i file my 2006 taxes He then summarizes the slips and enters them in the proper columns in the monthly check disbursements journal. How can i file my 2006 taxes 2. How can i file my 2006 taxes Monthly Summary of Cash Receipts This shows the income activity for the month. How can i file my 2006 taxes Henry carries the total monthly net sales shown in this summary for January ($4,865. How can i file my 2006 taxes 05) to his Annual Summary. How can i file my 2006 taxes 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. How can i file my 2006 taxes He cannot take a deduction for sales tax turned over to the state because he only collected the tax. How can i file my 2006 taxes He does not include the tax in his income. How can i file my 2006 taxes 3. How can i file my 2006 taxes Check Disbursements Journal Henry enters checks drawn on the business checking account in the Check Disbursements Journal each day. How can i file my 2006 taxes All checks are prenumbered and each check number is listed and accounted for in the column provided in the journal. How can i file my 2006 taxes Frequent expenses have their own headings across the sheet. How can i file my 2006 taxes He enters in a separate column expenses that require comparatively numerous or large payments each month, such as materials, gross payroll, and rent. How can i file my 2006 taxes Under the General Accounts column, he enters small expenses that normally have only one or two monthly payments, such as licenses and postage. How can i file my 2006 taxes Henry does not pay personal or nonbusiness expenses by checks drawn on the business account. How can i file my 2006 taxes If he did, he would record them in the journal, even though he could not deduct them as business expenses. How can i file my 2006 taxes Henry carries the January total of expenses for materials ($1,083. How can i file my 2006 taxes 50) to the Annual Summary. How can i file my 2006 taxes Similarly, he enters the monthly total of expenses for telephone, truck/auto, etc. How can i file my 2006 taxes , in the appropriate columns of that summary. How can i file my 2006 taxes 4. How can i file my 2006 taxes Employee Compensation Record This record shows the following information. How can i file my 2006 taxes The number of hours Henry's employee worked in a pay period. How can i file my 2006 taxes The employee's total pay for the period. How can i file my 2006 taxes The deductions Henry withheld in figuring the employee's net pay. How can i file my 2006 taxes The monthly gross payroll. How can i file my 2006 taxes Henry carries the January gross payroll ($520) to the Annual Summary. How can i file my 2006 taxes 5. How can i file my 2006 taxes Annual Summary This annual summary of monthly cash receipts and expense totals provides the final amounts to enter on Henry's tax return. How can i file my 2006 taxes He figures the cash receipts total from the total of monthly cash receipts shown in the Monthly Summary of Cash Receipts. How can i file my 2006 taxes He figures the expense totals from the totals of monthly expense items shown in the Check Disbursements Journal. How can i file my 2006 taxes As in the journal, he keeps each major expense in a separate column. How can i file my 2006 taxes Henry carries the cash receipts total shown in the annual summary ($47,440. How can i file my 2006 taxes 9