After you file your taxes, you will have many records that may help document items on your tax return. You will need these documents should the IRS select your return for examination. Here are five tips from the IRS about keeping good records.

1. Normally, tax records should be kept for three years.
2. Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.
3. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.
4. Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.

For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available on the IRS website at http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Taxpayers who owe taxes may be relieved to know that there are some options for those who owe and can’t afford to pay the full amount right away.

Here are the top 10 things the IRS wants you to know if you need more time to pay your taxes.

1. Taxpayers who are unable to pay all taxes due are encouraged to pay as much as possible. By paying as much as possible now, the amount of interest and penalties owed will be less.
2. Based on the circumstances, a taxpayer could qualify for an extension of time to pay, an installment agreement, temporary delay or an Offer in Compromise.
3. If you cannot pay the full amount, taxpayers should immediately call the number or write to the address on the bill they receive.
4. You may want to consider financing the full payment of your tax liability through a loan. The interest rate and fees charged by a bank or credit card company are usually lower than interest and penalties imposed by the Internal Revenue Code.
5. If you cannot pay in full immediately, you may qualify for a short amount of additional time, up to 120 days, to pay in full. No fee is charged for this type of payment arrangement and this option may minimize the amount of penalties and interest you incur.
6. You may also want to consider an installment agreement. This arrangement allows you to make monthly payments after a one-time fee of $105 is paid. If you choose to pay through a Direct Debit from your bank account, the fee is reduced to $52. Lower-income taxpayers may qualify for a reduced fee of $43.
7. To apply for an installment agreement you can use the Online Payment Agreement application available on the IRS website; file a Form 9465, Installment Agreement Request; or call the IRS at the telephone number shown on your bill.
8. In some cases, a taxpayer may qualify for an offer in compromise, an agreement between the taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Generally, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through a payment agreement.
9. Even if you set up an installment agreement, the IRS may still file a Notice of Federal Tax Lien to secure the government’s interest until you make the final payment.
10. It is important to respond to an IRS notice. If you do not pay your tax liability in full or make an alternative payment arrangement, the IRS is entitled to take collection action.

More information on the collection process is available at http://www.irs.gov.

Links:

• Payment Options – Ways To Make a Payment
• Other Ways to Resolve Tax Debt That Could Save You Money
• Online Payment Agreement Application
• Form 9465, Installment Agreement Request
• Publication 966, The Secure Way to Pay Your Federal Taxes
• Publication 594, The IRS Collection Process

Message from Intuit: Live technical support and business services—including Intuit QuickBooks Payroll—will be discontinued for QuickBooks 2008 onMay 31, 2011. If you are using QuickBooks 2008 and would like to continue to use your Basic, Standard, or Enhanced Payroll Service and any other connected services through QuickBooks, you’ll need to upgrade to a newer version of QuickBooks. If you no longer need payroll or other connected services, you can continue to use your QuickBooks 2008.

We understand that upgrading your QuickBooks software takes some effort. The new tools and features in QuickBooks 2011 give you faster access to the information you need and make your everyday tasks more efficient. You’ll also get all the time-saving new features added since you purchased QuickBooks 2008.

Intuit is committed to developing easy, straightforward financial tools that help you today and grow with you tomorrow. But it’s a balancing act—making QuickBooks better and easier to use while still supporting older versions. This is why we offer support for the current version of QuickBooks and the two previous versions.

If you use QuickBooks 2008 and Basic, Standard, or Enhanced Payroll services and you don’t upgrade by May 31, 2011:

• QuickBooks will no longer automatically calculate correct payroll taxes or provide payroll tax forms.
• Your paychecks will not be accurate.
• Your payroll subscription will be inactivated, and we will issue a prorated refund to you for the unused portion of your subscription.

Find out more about services affected and your options.

An Advanced Training Conference for Intuit Advisors

May 23-25, 2011 – Las Vegas NV

Join Hundreds of Other ProAdvisors to Experience…

• In-Depth Product Training on QuickBooks and QuickBooks Point of Sale
• In-Depth Product Training on Selected QuickBooks-Integrated Solutions
• Business Development Training (designed for the Intuit Advisor)
• Keynote Presentations by Intuit Executives
• Optional and Extensive Hands on Workshops on:
  • Advanced QuickBooks Topics
  • Designing Crystal Reports with QuickBooks Data
  • Business Plan Development (for the Intuit Advisor)
  • Method Level 1 and Level 2 Certification Training
  • …And More
• Exhibitions Presented by Intuit and Dozens of Leading Developers of QuickBooks Integrated Solutions
• Intuit Solution Provider Certification Exam Preparation
• Extreme Professional Networking Opportunities
  • Hundreds of QuickBooks ProAdvisors
  • Dozens of Key Intuit Employees and Executives
  • Leading Developers of QuickBooks-Integrated Apps
• …and More!

Learn more about the training at Scaling New Heights.

Most tax professionals are qualified, reliable and honest, but some aren’t. Filing taxes is too important to not do your homework in selecting a tax preparer. Unqualified tax preparers may overlook legitimate deductions or credits that could cause taxpayers to pay more tax than they should or make costly mistakes causing their clients to incur additional penalties and interest.

You, the taxpayer, are ultimately responsible for all information submitted to the IRS. When the IRS detects an inaccurate return, the taxpayer – not the tax preparer – must pay any additional taxes, interest, fees and penalties.

Individuals should choose their tax preparer as carefully as they choose their doctor or their lawyer. Don’t wait until the last minute. Take your time, shop around and find a preparer who is both qualified and has a strong track record of providing customer service to their clients.

Check out the Better Business Bureau website for accredited tax preparers.

January was a busy month for us.  We processed over 200 1099′s across 20 clients.  During our quest for gathering the information in order to file 1099′s, we ask vendors to fill out a W-9 form.  Typically this should be done upon hiring of the vendor this way the books are in order when January hits.  The differences between a W-9 and a 1099 are:

A IRS W-9 form is a request for taxpayer identification number.  Just like when you are hired on as employee and you fill out a W-4 form, a W-9 is for non-employees to give their information.  Its also used to identify what type of entity the company is, i.e. sole-proprietor, partnership or a corporation which in turn let’s your bookkeeper know whether or not a 1099 is needed to file.

A IRS 1099-MISC is a form reporting one’s non-employment income from a given source for a year.  This is in the form of rents, royalties, other income, fishing boat proceeds and non-employee compensation over $600.

I knew it had been a while since I posted, but was shocked to see May of 2010!  It’s been a whirlwind year.  My business has grown and really taken off and unfortunately has left no time for blogging.  Hoping to change that this year.  Happy New Year!

I bought a fantastic new piece of office equipment and couldn’t wait to share it with you!  The Fujitsu ScanSnap is my new timesaver.   It also comes with Adobe Acrobat which is a huge bonus.  To be able to scan all my documents to a PDF and edit, comment and markup them up for my clients allows me to be able to provide a higher level of detail in the services that I provide.  Here are the links for PC and MAC.

There are many records you have that may help document items on your tax return. You’ll need this documentation should the IRS select your return for examination. Here are five tips from the IRS about keeping good records.

1. Normally, tax records should be kept for three years.
2. Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.
3. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.
4. Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.
5. For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Links: Publication 552, Recordkeeping for Individuals ( PDF 61K )

While most income you receive is generally considered taxable, there are some situations when certain types of income are partially taxed or not taxed at all.

To ensure taxpayers are familiar with the difference between taxable and non-taxable income, the Internal Revenue Service offers these common examples of items that are not included in your income:

• Adoption Expense Reimbursements for qualifying expenses
• Child support payments
• Gifts, bequests and inheritances
• Workers’ compensation benefits
• Meals and Lodging for the convenience of your employer
• Compensatory Damages awarded for physical injury or physical sickness
• Welfare Benefits
• Cash Rebates from a dealer or manufacturer

Some income may be taxable under certain circumstances, but not taxable in other situations. Examples of items that may or may not be included in your income are:

• Life Insurance If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Life insurance proceeds, which were paid to you because of the insured person’s death, are not taxable unless the policy was turned over to you for a price.
• Scholarship or Fellowship Grant If you are a candidate for a degree, you can exclude amounts you receive as a qualified scholarship or fellowship. Amounts used for room and board do not qualify.
• Non-cash Income Taxable income may be in a form other than cash. One example of this is bartering, which is an exchange of property or services. The fair market value of goods and services exchanged is fully taxable and must be included as income on Form 1040 of both parties.

All other items—including income such as wages, salaries and tips—must be included in your income unless it is specifically excluded by law.

These examples are not all-inclusive. For more information, see Publication 525, Taxable and Nontaxable Income, which can be obtained at IRS.gov or by calling the IRS at 800-TAX-FORM (800-829-3676).

Link:

Publication 525, Taxable and Nontaxable Income (1178.2KB)