Top Tax Tips

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Top 16 Important Financial Documents to Compile
  1. Investments - Include stocks, bonds, mutual funds, futures contracts, warrants and options. List current market value, purchase price, number of units held, dividends and maturity dates.
  2. Real Estate - Current value, location of deeds, mortgage information, policies of title insurance for your principal and any other investment properties.
  3. Life & Disability Insurance Policies, Annuities, IRAs, Pensions and Profit Sharing Plans - Plan numbers, coverage, amounts, etc.
  4. Long-term Royalties - Due to you.
  5. Partnerships & Trusts
  6. Interests in closely held businesses
  7. Bank Accounts, CDs, Bonds, Treasury Securities - Locations, values, yield or maturity dates.
  8. Personal Property - Automobiles, boats, valuable jewelry, collectibles, etc.
  9. Short-term Liabilities - Amount owed on credit cards & installment loans. List accounts, numbers and balances.
  10. Long-term Liabilities - Amount owed on mortgages and loans for colleges, cars, home improvement and other purposes.
  11. Unpaid Taxes
  12. Safe Deposit Box - Bank, number, location of key.
  13. Estate Planning Items - Will, executors, burial plots.
  14. Advisers - List names and phone numbers of accountant, lawyer, insurance agent and securities broker.
  15. Insurance Policies - For home, cars and other property.
  16. Tax Returns - Location of past tax returns
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Top 10 Record-keeping Guidelines for Business
  1. Employee Earnings - Maintain for a minimum of four years to meet various state and federal requirements.
  2. Employee Time Cards - Maintain for at least three years if your business is engaged in interstate commerce. Although best to retain files for several years in case questions arise.
  3. Personnel Records - Retain three years after employee terminated.
  4. Employment Tax Records - Retain four years from the date the tax was due, or the date it was paid - whichever is longer.
  5. Employee Business Expenses - Retain supporting documents for the three-year statute of limitations period.
  6. Sales Tax Returns - State regulations vary. Retain for seven years and compliance with all state requirements should be met.
  7. Business Property - Records used to substantiate the cost and deductions associated with the property must be maintained to determine the basis and gain (or loss) on the sale. Retain these for as long as you own the asset, plus seven years.
  8. Employee Health & Benefit Plans - Retain six years after employee separates from firm.
  9. Pension Plan - Retain records permanently as they determine benefits due to employees. Supporting documents for ERISA filings should be retained for at least six years after filing.
  10. Business Tax Returns - Retain tax returns for at least seven years after they are due or filed, whichever is later.
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Top 10 Record-keeping Guidelines for Individuals
  1. Retain tax returns for at least seven years after they are due or filed, whichever is later.
  2. Backup records that support your tax return (receipts, expense logs, bank notices, sales records, etc.) should be retained for at least a three-year period.
  3. Real estate records should be retained for as long as you own the property plus three years after you dispose of it.
  4. Throughout real estate ownership, retain records of the purchase, receipts for home improvements, relevant insurance claims and documents relating to refinancing.
  5. Maintain detailed records of securities purchases and sales. Records should include dates, quantities, prices, dividend reinvestment, and investment expenses such as broker fees. Retain these records for as long as you own the investments, plus the statute of limitations on relevant tax returns.
  6. With Individual Retirement Accounts, keep copies of Forms 8606, 5498 and 1099-R until all the money is withdrawn from your accounts. Don't dispose of any ownership documentation until the statute of limitations expires.
  7. Records that support figures affecting multiple years, such as carryovers of charitable deductions, net operating loss carryforwards or casualty losses, need to be saved until the deductions no longer have effect, plus seven years.
  8. Retain estate planning documents indefinitely.
  9. Retain at least for one year bank records, bills, credit card statements/receipts, medical bills and paycheck stubs.
  10. Retain insurance documents for the life of the policy plus five years.
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Items Eligible for Medical Deductions

Many types of medical and dental expenses qualify for the tax deduction. Costs of diagnosing, treating, easing or preventing disease do qualify for the deduction. Here is a list of some other items:

  1. Prescription drugs
  2. Car (cost of special equipment so disable person may drive)
  3. Acupuncture or chiropractor fees
  4. Eyeglasses and contact lenses (plus wetting and cleaning solutions)
  5. Hearing aid
  6. Home improvements for medical purposes (to the extent they don't add to the value of your home)
  7. Meals (while staying in hospital or similar facility)
  8. Stop smoking program
  9. Telephone or television (cost of special equipment for hearing impaired)
  10. Weight loss program (if part of treatment for specific disease, such as obesity)
  11. Wig (if hair is lost due to medical issue)
  12. Artificial limbs/teeth
  13. Alcoholism/Drug Addiction Treatment
  14. Psychiatric Care/Mental Health Treatment
  15. Nutritional supplements - Need to be recommended by medical practitioner as treatment for a specific medical condition diagnosed by a physician

For a full list of deductions, refer to the IRS website link.

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7 Smart Tips for Success in Starting a 401(K) Plan
  1. Diversify investment vehicles and comply with DOL suitability and diversification rules.
  2. Create an Investment Policy Statement describing performance standards and realistic goals for the money manager.
  3. File reports on time and maintain documentation to show a defined process for selecting and monitoring investments.
  4. Educate employees on the benefits of 401(k) participation.
  5. Consider automatic enrollment to boost participation.
  6. Contribute to employees' accounts and increase your own tax-deferred growth.
  7. Hire a knowledgeable adviser and avoid compliance problems.
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Smart Tips on Leasing vs Buying

It is generally better to lease assets that will substantially decrease in value over time. However, if the asset is expected to last more than five years, the long-term costs associated with leasing may be greater than buying.

  • Pros of Leasing - smaller initial outlay of cash, lease contracts usually have easier credit terms, payments typically fully deductible for tax purposes.
  • Pros of Buying - ownership/equity, tax incentives, possibility of depreciation deduction
  • Cons of Leasing - overall cost may be greater, no equity, committed to lease contract
  • Cons of Buying - higher initial cash outlay, equipment may become obsolete over time

Before you make this decision, examine how it will affect cash flow, taxes and other factors.

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