Thursday, August 13, 2015

Saving Documents


Do I REALLY need this??
As we are closing in on the last few weeks of summer break I know a lot have begun the final push to get the house cleaned and decluttered.  Some things that usually take up the most space are all of those pesky tax documents that we have been told to hold on to FOREVER.  In reality most documents can be discarded after only a few years, freeing up more space for everything we NEED.  You know like all of those boxes of craft supplies, toys your kids couldn’t possibly part with or those jeans you will one day squeeze back in to. 

Period of Limitations that apply to income tax returns
The length of time you should keep a document depends on the action, expense, or event which the document records. Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out.
The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax.

For personal taxes you should hold onto all supporting documents for 3 years.  If however you have underreported income, you should then hold onto documents for 6 years. 
Are the records connected to property?
Generally, keep records relating to property until the period of limitations expires for the year in which you dispose of the property. You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.

Note: Always keep copies of your filed tax returns. They help in preparing future tax returns and making computations if you file an amended return.

Sunday, July 12, 2015

Tax Scams

Your phone's ringing.  It's the IRS??

Some of the most urgent calls I receive are of terrified individuals that have just been contacted via phone by the "IRS".
These callers may demand money and can sound very convincing. They can alter the caller ID, use fake IRS badge numbers and names often becoming very threatening. The IRS however has very formal processes in dealing with individuals with tax issues.   


If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:
  • If you know you owe taxes or think you might owe, call the IRS at 1.800.829.1040. The IRS workers can help you with a payment issue.
  • If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or at www.tigta.gov.
Some things to remember.......


The IRS will NEVER:
  1. Call to demand immediate payment, without first having mailed you a bill.
  2. Demand that you pay taxes without opportunity to  appeal the amount they say you owe.
  3. Require you to use a specific payment method for your taxes
  4. Ask for credit or debit card numbers over the phone.
  5. Threaten to bring in local police to have you arrested for not paying.




Monday, June 22, 2015

Gas Receipts

Do I save my gas receipts?

Taxes for small businesses can get confusing. The IRS has rules on gas, travel, and expenses claimed on your business; these rules can change every year. One of the most commonly asked questions is about gas receipts, mileage, and car expenses for travel.

For bookkeeping and tax purposes it is always a good idea to have supporting documentation such as receipts for all your expenses; however if you are a small business you also want to keep track of your mileage in addition to receipts.

Definition

Actual Expense- The actual expense amount deducted for business purposes based on receipts.

Mileage Expense- The actual mileage amount that you use to calculate your deduction based on the rate published by the IRS yearly.

Mileage is a tax deduction that you can take for the amount of miles that you use for business. Remember, if you use your vehicle for personal and business, you can not claim your personal mileage as a tax deduction on your taxes.

One of the easiest ways to keep track of your mileage is to purchase a log book. This log book can be given to your CPA each year at tax time. In return, your CPA will look up the current rate that the IRS is giving for mileage and calculate that in your taxes.This will make your mileage deduction.

There are rules to deducting expenses for your business. For example, you can not double claim a gas expense. Your business can use actual expense deduction or mileage deduction- but not both.

 At Kirby Urrabazo CPA, PLLC we are committed to helping you get the best refund possible. At Kirby CPA. "It all adds up!"