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Taxaide Publication 529 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. Taxaide Tax questions. Taxaide Useful Items - You may want to see: What's New Standard mileage rate. Taxaide The 2013 rate for business use of a vehicle is 56½ cents per mile. Taxaide Reminders Future developments. Taxaide For the latest information about developments related to Publication 529, such as legislation enacted after it was published, go to www. Taxaide irs. Taxaide gov/pub529. Taxaide Photographs of missing children. Taxaide The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Taxaide Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Taxaide You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Taxaide Introduction This publication explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR). Taxaide You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. Taxaide This publication covers the following topics. Taxaide Deductions subject to the 2% limit. Taxaide Deductions not subject to the 2% limit. Taxaide Expenses you cannot deduct. Taxaide How to report your deductions. Taxaide Some of the deductions previously discussed in this publication are adjustments to income rather than miscellaneous deductions. Taxaide These include certain employee business expenses that must be listed on Form 2106 or Form 2106-EZ and some that are entered directly on Form 1040. Taxaide Those deductions, which are discussed in Publication 463, Travel, Entertainment, Gift, and Car Expenses, include employee business expenses of officials paid on a fee basis and performing artists. Taxaide Note. Taxaide Generally, nonresident aliens are allowed miscellaneous itemized deductions to the extent they are directly related to income which is effectively connected with the conduct of a trade or business within the United States. Taxaide You must keep records to verify your deductions. Taxaide You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence. Taxaide For more information on recordkeeping, see Publication 552, Recordkeeping for Individuals. Taxaide Comments and suggestions. Taxaide We welcome your comments about this publication and your suggestions for future editions. Taxaide You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Taxaide NW, IR-6526 Washington, DC 20224 We respond to many letters by telephone. Taxaide Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Taxaide You can send your comments from www. Taxaide irs. Taxaide gov/formspubs. Taxaide Click on “More Information” and then on “Comment on Tax Forms and Publications. Taxaide ” 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. Taxaide Ordering forms and publications. Taxaide Visit www. Taxaide irs. Taxaide gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Taxaide Internal Revenue Service 1201 N. Taxaide Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Taxaide If you have a tax question, check the information available on IRS. Taxaide gov or call 1-800-829-1040. Taxaide We cannot answer tax questions sent to either of the above addresses. Taxaide Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) 946 How To Depreciate Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses See How To Get Tax Help near the end of this publication for information about getting these publications and forms. Taxaide Prev Up Next Home More Online Publications
Taxaide 1. Taxaide Importance of Records Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Benefits of Recordkeeping Kinds of Records To Keep How Long To Keep Records Introduction A farmer, like other taxpayers, must keep records to prepare an accurate income tax return and determine the correct amount of tax. Taxaide This chapter explains the benefits of keeping records, what kinds of records you must keep, and how long you must keep them for federal tax purposes. Taxaide Tax records are not the only type of records you need to keep for your farming business. Taxaide You should also keep records that measure your farm's financial performance. Taxaide This publication only discusses tax records. Taxaide The Farm Financial Standards Council has produced a publication that provides a detailed explanation of the recommendations of the Council for financial reporting and analysis. Taxaide For information on recordkeeping, you can purchase and download Financial Guidelines for Agricultural Producers at www. Taxaide ffsc. Taxaide org. Taxaide For more information, contact Countryside Marketing, Inc. Taxaide in the following manner. Taxaide Call 262-253-6902. Taxaide Send a fax to 262-253-6903. Taxaide Write to: Farm Financial Standards Council N78 W14573 Appleton Ave. Taxaide , #287 Menomonee Falls, WI 53051. Taxaide Topics - This chapter discusses: Benefits of recordkeeping Kinds of records to keep How long to keep records Useful Items - You may want to see: Publication 51 (Circular A), Agricultural Employer's Tax Guide 463 Travel, Entertainment, Gift, and Car Expenses See chapter 16 for information about getting publications. Taxaide Benefits of Recordkeeping Everyone in business, including farmers, must keep appropriate records. Taxaide Recordkeeping will help you do the following. Taxaide Monitor the progress of your farming business. Taxaide You need records to monitor the progress of your farming business. Taxaide Records can show whether your business is improving, which items are selling, or what changes you need to make. Taxaide Records can help you make better decisions that may increase the likelihood of business success. Taxaide Prepare your financial statements. Taxaide You need records to prepare accurate financial statements. Taxaide These include income (profit and loss) statements and balance sheets. Taxaide These statements can help you in dealing with your bank or creditors and help you to manage your farm business. Taxaide Identify source of receipts. Taxaide You will receive money or property from many sources. Taxaide Your records can identify the source of your receipts. Taxaide You need this information to separate farm from nonfarm receipts and taxable from nontaxable income. Taxaide Keep track of deductible expenses. Taxaide You may forget expenses when you prepare your tax return unless you record them when they occur. Taxaide Prepare your tax returns. Taxaide You need records to prepare your tax return. Taxaide For example, your records must support the income, expenses, and credits you report. Taxaide Generally, these are the same records you use to monitor your farming business and prepare your financial statements. Taxaide Support items reported on tax returns. Taxaide You must keep your business records available at all times for inspection by the IRS. Taxaide If the IRS examines any of your tax returns, you may be asked to explain the items reported. Taxaide A complete set of records will speed up the examination. Taxaide Kinds of Records To Keep Except in a few cases, the law does not require any specific kind of records. Taxaide You can choose any recordkeeping system suited to your farming business that clearly shows, for example, your income and expenses. Taxaide You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. Taxaide See chapter 2. Taxaide If you are in more than one business, you should keep a complete and separate set of records for each business. Taxaide A corporation should keep minutes of board of directors' meetings. Taxaide Your recordkeeping system should include a summary of your business transactions. Taxaide This summary is ordinarily made in accounting journals and ledgers. Taxaide For example, they must show your gross income, as well as your deductions and credits. Taxaide In addition, you must keep supporting documents. Taxaide Purchases, sales, payroll, and other transactions you have in your business generate supporting documents such as invoices and receipts. Taxaide These documents contain the information you need to record in your journals and ledgers. Taxaide It is important to keep these documents because they support the entries in your journals and ledgers and on your tax return. Taxaide Keep them in an orderly fashion and in a safe place. Taxaide For instance, organize them by year and type of income or expense. Taxaide Electronic records. Taxaide All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. Taxaide 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. Taxaide 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. Taxaide The electronic storage system must index, store, preserve, retrieve and reproduce the electronically stored books and records in legible format. Taxaide All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. Taxaide Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. Taxaide 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. Taxaide You still have the responsibility of retaining any other books and records that are required to be retained. Taxaide The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. Taxaide This test is not considered an examination and the results must be shared with you. Taxaide If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. Taxaide If not, you may be subject to penalties for non-compliance, unless you continue to maintain your original hard copybooks and records in a manner that allows you and the IRS to determine your correct tax. Taxaide For details on electronic storage system requirements, see Rev. Taxaide Proc. Taxaide 97-22. Taxaide You can find Rev. Taxaide Proc. Taxaide 97-22 on page 9 of Internal Revenue Bulletin 1997-13 at www. Taxaide irs. Taxaide gov/pub/irs-irbs/irb97-13. Taxaide pdf. Taxaide Travel, transportation, entertainment, and gift expenses. Taxaide Specific recordkeeping rules apply to these expenses. Taxaide For more information, see Publication 463. Taxaide Employment taxes. Taxaide There are specific employment tax records you must keep. Taxaide For a list, see Publication 51 (Circular A). Taxaide Excise taxes. Taxaide See How To Claim a Credit or Refund in chapter 14 for the specific records you must keep to verify your claim for credit or refund of excise taxes on certain fuels. Taxaide Assets. Taxaide Assets are the property, such as machinery and equipment, you own and use in your business. Taxaide You must keep records to verify certain information about your business assets. Taxaide You need records to figure your annual depreciation deduction and the gain or (loss) when you sell the assets. Taxaide Your records should show all the following. Taxaide When and how you acquired the asset. Taxaide Purchase price. Taxaide Cost of any improvements. Taxaide Section 179 deduction taken. Taxaide Deductions taken for depreciation. Taxaide Deductions taken for casualty losses, such as losses resulting from fires or storms. Taxaide How you used the asset. Taxaide When and how you disposed of the asset. Taxaide Selling price. Taxaide Expenses of sale. Taxaide The following are examples of records that may show this information. Taxaide Purchase and sales invoices. Taxaide Real estate closing statements. Taxaide Canceled checks. Taxaide Bank statements. Taxaide Financial account statements as proof of payment. Taxaide If you do not have a canceled check, you may be able to prove payment with certain financial account statements prepared by financial institutions. Taxaide These include account statements prepared for the financial institution by a third party. Taxaide These account statements must be legible. Taxaide The following table lists acceptable account statements. Taxaide IF payment is by. Taxaide . Taxaide . Taxaide THEN the statement must show the. Taxaide . Taxaide . Taxaide Check Check number. Taxaide Amount. Taxaide Payee's name. Taxaide Date the check amount was posted to the account by the financial institution. Taxaide Electronic funds transfer Amount transferred. Taxaide Payee's name. Taxaide Date the transfer was posted to the account by the financial institution. Taxaide Credit card Amount charged. Taxaide Payee's name. Taxaide Transaction date. Taxaide Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. Taxaide You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost. Taxaide Tax returns. Taxaide Keep copies of your filed tax returns. Taxaide They help in preparing future tax returns and making computations if you file an amended return. Taxaide Keep copies of your information returns such as Form 1099, Schedule K-1, and Form W-2. Taxaide 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. Taxaide Keep records that support an item of income or a deduction appearing on a return until the period of limitations for the return runs out. Taxaide A period of limitations is the period of time after which no legal action can be brought. Taxaide Generally, that means you must keep your records for at least 3 years from when your tax return was due or filed or within 2 years of the date the tax was paid, whichever is later. Taxaide However, certain records must be kept for a longer period of time, as discussed below. Taxaide Employment taxes. Taxaide 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. Taxaide Assets. Taxaide 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. Taxaide 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. Taxaide You may need to keep records relating to the basis of property longer than the period of limitation. Taxaide Keep those records as long as they are important in figuring the basis of the original or replacement property. Taxaide Generally, this means as long as you own the property and, after you dispose of it, for the period of limitations that applies to you. Taxaide For example, if you received property in a nontaxable exchange, you must keep the records for the old property, as well as for the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition. Taxaide For more information on basis, see chapter 6. Taxaide Records for nontax purposes. Taxaide 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. Taxaide For example, your insurance company or creditors may require you to keep them longer than the IRS does. Taxaide Prev Up Next Home More Online Publications