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File 2011 State Taxes Free

File 2011 state taxes free Publication 583 - Main Content Table of Contents What New Business Owners Need To Know Forms of BusinessMore information. File 2011 state taxes free More information. File 2011 state taxes free Exception—Community Income. File 2011 state taxes free Exception—Qualified joint venture. File 2011 state taxes free More information. File 2011 state taxes free More information. File 2011 state taxes free 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. File 2011 state taxes free 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. File 2011 state taxes free Table 1 can help you learn what those responsibilities are. File 2011 state taxes free Ask yourself each question listed in the table, then see the related discussion to find the answer. File 2011 state taxes free In addition to knowing about federal taxes, you need to make some basic business decisions. File 2011 state taxes free 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. File 2011 state taxes free For information on how to contact the SBA, see How to Get More Information, later. File 2011 state taxes free Forms of Business The most common forms of business are the sole proprietorship, partnership, and corporation. File 2011 state taxes free When beginning a business, you must decide which form of business to use. File 2011 state taxes free Legal and tax considerations enter into this decision. File 2011 state taxes free Only tax considerations are discussed in this publication. File 2011 state taxes free Your form of business determines which income tax return form you have to file. File 2011 state taxes free See Table 2 to find out which form you have to file. File 2011 state taxes free Sole proprietorships. File 2011 state taxes free   A sole proprietorship is an unincorporated business that is owned by one individual. File 2011 state taxes free It is the simplest form of business organization to start and maintain. File 2011 state taxes free The business has no existence apart from you, the owner. File 2011 state taxes free Its liabilities are your personal liabilities. File 2011 state taxes free You undertake the risks of the business for all assets owned, whether or not used in the business. File 2011 state taxes free You include the income and expenses of the business on your personal tax return. File 2011 state taxes free More information. File 2011 state taxes free   For more information on sole proprietorships, see Publication 334, Tax Guide for Small Business. File 2011 state taxes free If you are a farmer, see Publication 225, Farmer's Tax Guide. File 2011 state taxes free Partnerships. File 2011 state taxes free   A partnership is the relationship existing between two or more persons who join to carry on a trade or business. File 2011 state taxes free Each person contributes money, property, labor, or skill, and expects to share in the profits and losses of the business. File 2011 state taxes free   A partnership must file an annual information return to report the income, deductions, gains, losses, etc. File 2011 state taxes free , from its operations, but it does not pay income tax. File 2011 state taxes free Instead, it “passes through” any profits or losses to its partners. File 2011 state taxes free Each partner includes his or her share of the partnership's items on his or her tax return. File 2011 state taxes free More information. File 2011 state taxes free   For more information on partnerships, see Publication 541, Partnerships. File 2011 state taxes free Husband and wife business. File 2011 state taxes free   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. File 2011 state taxes free Do not use Schedule C or C-EZ. File 2011 state taxes free Instead, file Form 1065, U. File 2011 state taxes free S. File 2011 state taxes free Return of Partnership Income. File 2011 state taxes free For more information, see Publication 541, Partnerships. File 2011 state taxes free Exception—Community Income. File 2011 state taxes free   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. File 2011 state taxes free S. File 2011 state taxes free possession, you can treat the business either as a sole proprietorship or a partnership. File 2011 state taxes free The only states with community property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. File 2011 state taxes free A change in your reporting position will be treated as a conversion of the entity. File 2011 state taxes free Exception—Qualified joint venture. File 2011 state taxes free   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. File 2011 state taxes free 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. File 2011 state taxes free For an explanation of "material participation," see the Instructions for Schedule C, line G. File 2011 state taxes free   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. File 2011 state taxes free Each of you must file a separate Schedule C or C-EZ and a separate Schedule SE. File 2011 state taxes free For more information, see Qualified Joint Venture in the Instructions for Schedule SE. File 2011 state taxes free Corporations. File 2011 state taxes free   In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. File 2011 state taxes free A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. File 2011 state taxes free A corporation can also take special deductions. File 2011 state taxes free   The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. File 2011 state taxes free However, shareholders cannot deduct any loss of the corporation. File 2011 state taxes free More information. File 2011 state taxes free   For more information on corporations, see Publication 542, Corporations. File 2011 state taxes free S corporations. File 2011 state taxes free   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. File 2011 state taxes free Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income. File 2011 state taxes free 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. File 2011 state taxes free More information. File 2011 state taxes free   For more information on S corporations, see the instructions for Form 2553, Election by a Small Business Corporation, and Form 1120S, U. File 2011 state taxes free S. File 2011 state taxes free Income Tax Return for an S Corporation. File 2011 state taxes free Limited liability company. File 2011 state taxes free   A limited liability company (LLC) is an entity formed under state law by filing articles of organization as an LLC. File 2011 state taxes free The members of an LLC are not personally liable for its debts. File 2011 state taxes free 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. File 2011 state taxes free 7701-3. File 2011 state taxes free For more information, see the instructions for Form 8832, Entity Classification Election. File 2011 state taxes free Identification Numbers You must have a taxpayer identification number so the IRS can process your returns. File 2011 state taxes free The two most common kinds of taxpayer identification numbers are the social security number (SSN) and the employer identification number (EIN). File 2011 state taxes free An SSN is issued to individuals by the Social Security Administration (SSA) and is in the following format: 000–00–0000. File 2011 state taxes free An EIN is issued to individuals (sole proprietors), partnerships, corporations, and other entities by the IRS and is in the following format: 00–0000000. File 2011 state taxes free You must include your taxpayer identification number (SSN or EIN) on all returns and other documents you send to the IRS. File 2011 state taxes free You must also furnish your number to other persons who use your identification number on any returns or documents they send to the IRS. File 2011 state taxes free This includes returns or documents filed to report the following information. File 2011 state taxes free Interest, dividends, royalties, etc. File 2011 state taxes free , paid to you. File 2011 state taxes free Any amount paid to you as a dependent care provider. File 2011 state taxes free Certain other amounts paid to you that total $600 or more for the year. File 2011 state taxes free If you do not furnish your identification number as required, you may be subject to penalties. File 2011 state taxes free See Penalties, later. File 2011 state taxes free Employer Identification Number (EIN) EINs are used to identify the tax accounts of employers, certain sole proprietors, corporations, partnerships, estates, trusts, and other entities. File 2011 state taxes free 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. File 2011 state taxes free Applying for an EIN. File 2011 state taxes free   You may apply for an EIN: Online—Click on the EIN link at www. File 2011 state taxes free irs. File 2011 state taxes free gov/businesses/small. File 2011 state taxes free The EIN is issued immediately once the application information is validated. File 2011 state taxes free By telephone at 1-800-829-4933. File 2011 state taxes free By mailing or faxing Form SS-4, Application for Employer Identification Number. File 2011 state taxes free When to apply. File 2011 state taxes free   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. File 2011 state taxes free If you apply by mail, file Form SS-4 at least 4 weeks before you need an EIN. File 2011 state taxes free If you apply by telephone or through the IRS website, you can get an EIN immediately. File 2011 state taxes free If you apply by fax, you can get an EIN within 4 business days. File 2011 state taxes free   If you do not receive your EIN by the time a return is due, file your return anyway. File 2011 state taxes free Write “Applied for” and the date you applied for the number in the space for the EIN. File 2011 state taxes free Do not use your social security number as a substitute for an EIN on your tax returns. File 2011 state taxes free More than one EIN. File 2011 state taxes free   You should have only one EIN. File 2011 state taxes free 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. File 2011 state taxes free Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. File 2011 state taxes free The IRS will tell you which number to use. File 2011 state taxes free More information. File 2011 state taxes free   For more information about EINs, see Publication 1635, Understanding Your EIN. File 2011 state taxes free 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). File 2011 state taxes free The forms used to report these payments must include the payee's identification number. File 2011 state taxes free Employee. File 2011 state taxes free   If you have employees, you must get an SSN from each of them. File 2011 state taxes free Record the name and SSN of each employee exactly as they are shown on the employee's social security card. File 2011 state taxes free If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. File 2011 state taxes free This may occur, for example, if the employee's name has changed due to marriage or divorce. File 2011 state taxes free   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. File 2011 state taxes free This form is available at SSA offices or by calling 1-800-772-1213. File 2011 state taxes free It is also available from the SSA website at www. File 2011 state taxes free ssa. File 2011 state taxes free gov. File 2011 state taxes free Other payee. File 2011 state taxes free   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. File 2011 state taxes free If you make reportable payments to an organization, such as a corporation or partnership, you must get its EIN. File 2011 state taxes free   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. File 2011 state taxes free This form is available from IRS offices or by calling 1-800-829-3676. File 2011 state taxes free It is also available from the IRS website at IRS. File 2011 state taxes free gov. File 2011 state taxes free    If the payee does not provide you with an identification number, you may have to withhold part of the payments as backup withholding. File 2011 state taxes free For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. File 2011 state taxes free Tax Year You must figure your taxable income and file an income tax return based on an annual accounting period called a tax year. File 2011 state taxes free A tax year is usually 12 consecutive months. File 2011 state taxes free There are two kinds of tax years. File 2011 state taxes free Calendar tax year. File 2011 state taxes free A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. File 2011 state taxes free Fiscal tax year. File 2011 state taxes free A fiscal tax year is 12 consecutive months ending on the last day of any month except December. File 2011 state taxes free 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. File 2011 state taxes free 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. File 2011 state taxes free You must use a calendar tax year if: You keep no books. File 2011 state taxes free You have no annual accounting period. File 2011 state taxes free Your present tax year does not qualify as a fiscal year. File 2011 state taxes free You are required to use a calendar year by a provision of the Internal Revenue Code or the Income Tax Regulations. File 2011 state taxes free For more information, see Publication 538, Accounting Periods and Methods. File 2011 state taxes free First-time filer. File 2011 state taxes free   If you have never filed an income tax return, you can adopt either a calendar tax year or a fiscal tax year. File 2011 state taxes free You adopt a tax year by filing your first income tax return using that tax year. File 2011 state taxes free You have not adopted a tax year if you merely did any of the following. File 2011 state taxes free Filed an application for an extension of time to file an income tax return. File 2011 state taxes free Filed an application for an employer identification number. File 2011 state taxes free Paid estimated taxes for that tax year. File 2011 state taxes free Changing your tax year. File 2011 state taxes free   Once you have adopted your tax year, you may have to get IRS approval to change it. File 2011 state taxes free To get approval, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year. File 2011 state taxes free You may have to pay a fee. File 2011 state taxes free For more information, see Publication 538. File 2011 state taxes free Accounting Method An accounting method is a set of rules used to determine when and how income and expenses are reported. File 2011 state taxes free You choose an accounting method for your business when you file your first income tax return. File 2011 state taxes free There are two basic accounting methods. File 2011 state taxes free Cash method. File 2011 state taxes free Under the cash method, you report income in the tax year you receive it. File 2011 state taxes free You usually deduct or capitalize expenses in the tax year you pay them. File 2011 state taxes free Accrual method. File 2011 state taxes free 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. File 2011 state taxes free You deduct or capitalize expenses in the tax year you incur them, whether or not you pay them that year. File 2011 state taxes free For other methods, see Publication 538. File 2011 state taxes free If you need inventories to show income correctly, you must generally use an accrual method of accounting for purchases and sales. File 2011 state taxes free Inventories include goods held for sale in the normal course of business. File 2011 state taxes free They also include raw materials and supplies that will physically become a part of merchandise intended for sale. File 2011 state taxes free Inventories are explained in Publication 538. File 2011 state taxes free 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. File 2011 state taxes free For more information, see Publication 538. File 2011 state taxes free You must use the same accounting method to figure your taxable income and to keep your books. File 2011 state taxes free Also, you must use an accounting method that clearly shows your income. File 2011 state taxes free In general, any accounting method that consistently uses accounting principles suitable for your trade or business clearly shows income. File 2011 state taxes free An accounting method clearly shows income only if it treats all items of gross income and expense the same from year to year. File 2011 state taxes free More than one business. File 2011 state taxes free   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. File 2011 state taxes free You must keep a complete and separate set of books and records for each business. File 2011 state taxes free Changing your method of accounting. File 2011 state taxes free   Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. File 2011 state taxes free 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. File 2011 state taxes free For examples of changes that require approval and information on how to get approval for the change, see Publication 538. File 2011 state taxes free Business Taxes The form of business you operate determines what taxes you must pay and how you pay them. File 2011 state taxes free The following are the four general kinds of business taxes. File 2011 state taxes free Income tax. File 2011 state taxes free Self-employment tax. File 2011 state taxes free Employment taxes. File 2011 state taxes free Excise taxes. File 2011 state taxes free See Table 2 for the forms you file to report these taxes. File 2011 state taxes free You may want to get Publication 509. File 2011 state taxes free It has tax calendars that tell you when to file returns and make tax payments. File 2011 state taxes free Income Tax All businesses except partnerships must file an annual income tax return. File 2011 state taxes free Partnerships file an information return. File 2011 state taxes free Which form you use depends on how your business is organized. File 2011 state taxes free See Table 2 to find out which return you have to file. File 2011 state taxes free The federal income tax is a pay-as-you-go tax. File 2011 state taxes free You must pay the tax as you earn or receive income during the year. File 2011 state taxes free An employee usually has income tax withheld from his or her pay. File 2011 state taxes free If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. File 2011 state taxes free If you are not required to make estimated tax payments, you may pay any tax due when you file your return. File 2011 state taxes free Table 2. File 2011 state taxes free Which Forms Must I File? IF you are a. File 2011 state taxes free . File 2011 state taxes free . File 2011 state taxes free   THEN you may be liable for. File 2011 state taxes free . File 2011 state taxes free . File 2011 state taxes free   Use Form. File 2011 state taxes free . File 2011 state taxes free . File 2011 state taxes free 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. File 2011 state taxes free 2 Various other schedules may be needed. File 2011 state taxes free Estimated tax. File 2011 state taxes free   Generally, you must pay taxes on income, including self-employment tax (discussed next), by making regular payments of estimated tax during the year. File 2011 state taxes free Sole proprietors, partners, and S corporation shareholders. File 2011 state taxes free   You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. File 2011 state taxes free Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. File 2011 state taxes free For more information, see Publication 505, Tax Withholding and Estimated Tax. File 2011 state taxes free Corporations. File 2011 state taxes free   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. File 2011 state taxes free Use Form 1120-W, Estimated Tax for Corporations, to figure the estimated tax. File 2011 state taxes free You must deposit the payments as explained later under Depositing Taxes. File 2011 state taxes free For more information, see Publication 542. File 2011 state taxes free Self-Employment Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. File 2011 state taxes free Your payments of SE tax contribute to your coverage under the social security system. File 2011 state taxes free Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. File 2011 state taxes free You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. File 2011 state taxes free Your net earnings from self-employment were $400 or more. File 2011 state taxes free You had church employee income of $108. File 2011 state taxes free 28 or more. File 2011 state taxes free Use Schedule SE (Form 1040) to figure your SE tax. File 2011 state taxes free For more information, see Publication 334, Tax Guide for Small Business. File 2011 state taxes free You can deduct a portion of your SE tax as an adjustment to income on your Form 1040. File 2011 state taxes free The Social Security Administration (SSA) time limit for posting self-employment income. File 2011 state taxes free   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. File 2011 state taxes free 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. File 2011 state taxes free The SSA will not change its records to increase your self-employment income. File 2011 state taxes free 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. File 2011 state taxes free Employment taxes include the following. File 2011 state taxes free Social security and Medicare taxes. File 2011 state taxes free Federal income tax withholding. File 2011 state taxes free Federal unemployment (FUTA) tax. File 2011 state taxes free If you have employees, you will need to get Publication 15, Circular E, Employer's Tax Guide. File 2011 state taxes free If you have agricultural employees, get Publication 51, Circular A, Agricultural Employer's Tax Guide. File 2011 state taxes free These publications explain your tax responsibilities as an employer. File 2011 state taxes free If you are not sure whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. File 2011 state taxes free That publication has information to help you determine whether an individual is an employee or an independent contractor. File 2011 state taxes free If you classify an employee as an independent contractor, you can be held liable for employment taxes for that worker plus a penalty. File 2011 state taxes free An independent contractor is someone who is self-employed. File 2011 state taxes free Generally, you do not have to withhold or pay any taxes on payments to an independent contractor. File 2011 state taxes free Federal Income, Social Security, and Medicare Taxes You generally must withhold federal income tax from your employee's wages. File 2011 state taxes free 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. File 2011 state taxes free Social security and Medicare taxes pay for benefits that workers and their families receive under the Federal Insurance Contributions Act (FICA). File 2011 state taxes free Social security tax pays for benefits under the old-age, survivors, and disability insurance part of FICA. File 2011 state taxes free Medicare tax pays for benefits under the hospital insurance part of FICA. File 2011 state taxes free You withhold part of these taxes from your employee's wages and you pay a part yourself. File 2011 state taxes free To find out how much social security and Medicare tax to withhold and to pay, see Publication 15. File 2011 state taxes free 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. File 2011 state taxes free (Farm employers use Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. File 2011 state taxes free ) 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. File 2011 state taxes free You report and pay FUTA tax separately from social security and Medicare taxes and withheld income tax. File 2011 state taxes free You pay FUTA tax only from your own funds. File 2011 state taxes free Employees do not pay this tax or have it withheld from their pay. File 2011 state taxes free Which form do I file?   Report federal unemployment tax on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. File 2011 state taxes free See Publication 15 to find out if you can use this form. File 2011 state taxes free Hiring Employees Have the employees you hire fill out Form I-9 and Form W-4. File 2011 state taxes free Form I-9. File 2011 state taxes free   You must verify that each new employee is legally eligible to work in the United States. File 2011 state taxes free Both you and the employee must complete the U. File 2011 state taxes free S. File 2011 state taxes free Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. File 2011 state taxes free You can get the form from USCIS offices or from the USCIS website at www. File 2011 state taxes free uscis. File 2011 state taxes free gov. File 2011 state taxes free Call the USCIS at 1-800-375-5283 for more information about your responsibilities. File 2011 state taxes free Form W-4. File 2011 state taxes free   Each employee must fill out Form W-4, Employee's Withholding Allowance Certificate. File 2011 state taxes free 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. File 2011 state taxes free For more information, see Publication 15. File 2011 state taxes free Employees claiming more than 10 withholding allowances. File 2011 state taxes free   An employer of an employee who claims more than 10 withholding allowances for wages paid can use several methods of withholding. File 2011 state taxes free See section 16 of Publication 15. File 2011 state taxes free 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. File 2011 state taxes free You must also send copies to the Social Security Administration. File 2011 state taxes free See Information Returns, later, for more information on Form W-2. File 2011 state taxes free 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. File 2011 state taxes free Manufacture or sell certain products. File 2011 state taxes free Operate certain kinds of businesses. File 2011 state taxes free Use various kinds of equipment, facilities, or products. File 2011 state taxes free Receive payment for certain services. File 2011 state taxes free For more information on excise taxes, see Publication 510, Excise Taxes. File 2011 state taxes free Form 720. File 2011 state taxes free   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. File 2011 state taxes free Environmental taxes. File 2011 state taxes free Communications and air transportation taxes. File 2011 state taxes free Fuel taxes. File 2011 state taxes free Tax on the first retail sale of heavy trucks, trailers, and tractors. File 2011 state taxes free Manufacturers taxes on the sale or use of a variety of different articles. File 2011 state taxes free Form 2290. File 2011 state taxes free   There is a federal excise tax on certain trucks, truck tractors, and buses used on public highways. File 2011 state taxes free The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. File 2011 state taxes free Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. File 2011 state taxes free For more information, see the instructions for Form 2290. File 2011 state taxes free Form 730. File 2011 state taxes free   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. File 2011 state taxes free Use Form 730, Monthly Tax Return for Wagers, to figure the tax on the wagers you receive. File 2011 state taxes free Form 11-C. File 2011 state taxes free   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. File 2011 state taxes free Depositing Taxes You generally have to deposit employment taxes, certain excise taxes, corporate income tax, and S corporation taxes before you file your return. File 2011 state taxes free Generally, taxpayers are required to deposit taxes through the Electronic Federal Tax Payment System (EFTPS). File 2011 state taxes free Any business that has a federal tax obligation and requests a new EIN will automatically be enrolled in EFTPS. File 2011 state taxes free Through the mail, the business will receive an EFTPS PIN package that contains instructions for activating its EFTPS enrollment. File 2011 state taxes free Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. File 2011 state taxes free 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. File 2011 state taxes free You must give a copy of each information return you are required to file to the recipient or payer. File 2011 state taxes free In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. File 2011 state taxes free For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. File 2011 state taxes free Form 1099-MISC. File 2011 state taxes free   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your trade or business. File 2011 state taxes free These payments include the following items. File 2011 state taxes free 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. File 2011 state taxes free Rent payments of $600 or more, other than rents paid to real estate agents. File 2011 state taxes free Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. File 2011 state taxes free Royalty payments of $10 or more. File 2011 state taxes free Payments to certain crew members by operators of fishing boats. File 2011 state taxes free 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. File 2011 state taxes free Form W-2. File 2011 state taxes free   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. File 2011 state taxes free For more information on what to report on Form W-2, see the Instructions for Forms W-2 and W-3. File 2011 state taxes free Form 8300. File 2011 state taxes free   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. File 2011 state taxes free Cash includes U. File 2011 state taxes free S. File 2011 state taxes free and foreign coin and currency. File 2011 state taxes free It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. File 2011 state taxes free For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). File 2011 state taxes free Penalties The law provides penalties for not filing returns or paying taxes as required. File 2011 state taxes free Criminal penalties may be imposed for willful failure to file, tax evasion, or making a false statement. File 2011 state taxes free Failure to file tax returns. File 2011 state taxes free   If you do not file your tax return by the due date, you may have to pay a penalty. File 2011 state taxes free The penalty is based on the tax not paid by the due date. File 2011 state taxes free See your tax return instructions for more information about this penalty. File 2011 state taxes free Failure to pay tax. File 2011 state taxes free   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. File 2011 state taxes free For more information, see your tax return instructions. File 2011 state taxes free Failure to withhold, deposit, or pay taxes. File 2011 state taxes free   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. File 2011 state taxes free You may also be subject to penalties if you deposit the taxes late. File 2011 state taxes free For more information, see Publication 15. File 2011 state taxes free Failure to follow information reporting requirements. File 2011 state taxes free   The following penalties apply if you are required to file information returns. File 2011 state taxes free For more information, see the General Instructions for Certain Information Returns. File 2011 state taxes free Failure to file information returns. File 2011 state taxes free 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. File 2011 state taxes free Failure to furnish correct payee statements. File 2011 state taxes free 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. File 2011 state taxes free Waiver of penalty. File 2011 state taxes free   These penalties will not apply if you can show that the failures were due to reasonable cause and not willful neglect. File 2011 state taxes free   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. File 2011 state taxes free (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. File 2011 state taxes free ) Failure to supply taxpayer identification number. File 2011 state taxes free   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. File 2011 state taxes free 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. File 2011 state taxes free Business Expenses You can deduct business expenses on your income tax return. File 2011 state taxes free These are the current operating costs of running your business. File 2011 state taxes free To be deductible, a business expense must be both ordinary and necessary. File 2011 state taxes free An ordinary expense is one that is common and accepted in your field of business, trade, or profession. File 2011 state taxes free A necessary expense is one that is helpful and appropriate for your business, trade, or profession. File 2011 state taxes free An expense does not have to be indispensable to be considered necessary. File 2011 state taxes free The following are brief explanations of some expenses that are of interest to people starting a business. File 2011 state taxes free There are many other expenses that you may be able to deduct. File 2011 state taxes free See your form instructions and Publication 535, Business Expenses. File 2011 state taxes free Business Start-Up Costs Business start-up costs are the expenses you incur before you actually begin business operations. File 2011 state taxes free Your business start-up costs will depend on the type of business you are starting. File 2011 state taxes free They may include costs for advertising, travel, surveys, and training. File 2011 state taxes free These costs are generally capital expenses. File 2011 state taxes free You usually recover costs for a particular asset (such as machinery or office equipment) through depreciation (discussed next). File 2011 state taxes free 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. File 2011 state taxes free The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. File 2011 state taxes free Any remaining cost must be amortized. File 2011 state taxes free For more information about amortizing start-up and organizational costs, see chapter 7 in Publication 535. File 2011 state taxes free 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. File 2011 state taxes free You must spread the cost over more than one tax year and deduct part of it each year. File 2011 state taxes free This method of deducting the cost of business property is called depreciation. File 2011 state taxes free Business property you must depreciate includes the following items. File 2011 state taxes free Office furniture. File 2011 state taxes free Buildings. File 2011 state taxes free Machinery and equipment. File 2011 state taxes free You can choose to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. File 2011 state taxes free This deduction is known as the “section 179 deduction. File 2011 state taxes free ” For more information about depreciation and the section 179 deduction, see Publication 946, How To Depreciate Property. File 2011 state taxes free Depreciation must be taken in the year it is allowable. File 2011 state taxes free Allowable depreciation not taken in a prior year cannot be taken in the current year. File 2011 state taxes free If you do not deduct the correct depreciation, you may be able to make a correction by filing Form 1040X, Amended U. File 2011 state taxes free S. File 2011 state taxes free Individual Income Tax Return, or by changing your accounting method. File 2011 state taxes free For more information on how to correct depreciation deductions, see chapter 1 in Publication 946. File 2011 state taxes free Business Use of Your Home To deduct expenses related to the business use of part of your home, you must meet specific requirements. File 2011 state taxes free Even then, your deduction may be limited. File 2011 state taxes free To qualify to claim expenses for business use of your home, you must meet both the following tests. File 2011 state taxes free 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. File 2011 state taxes free Exclusive use. File 2011 state taxes free   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. File 2011 state taxes free The area used for business can be a room or other separately identifiable space. File 2011 state taxes free The space does not need to be marked off by a permanent partition. File 2011 state taxes free   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. File 2011 state taxes free Exceptions to exclusive use. File 2011 state taxes free   You do not have to meet the exclusive use test if either of the following applies. File 2011 state taxes free You use part of your home for the storage of inventory or product samples. File 2011 state taxes free You use part of your home as a daycare facility. File 2011 state taxes free For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). File 2011 state taxes free Principal place of business. File 2011 state taxes free   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. File 2011 state taxes free You use it exclusively and regularly for administrative or management activities of your trade or business. File 2011 state taxes free You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. File 2011 state taxes free   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. File 2011 state taxes free The relative importance of the activities performed at each location. File 2011 state taxes free If the relative importance factor does not determine your principal place of business, the time spent at each location. File 2011 state taxes free    If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. File 2011 state taxes free However, for other ways to qualify to deduct home office expenses, see Publication 587. File 2011 state taxes free 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. File 2011 state taxes free If you file Schedule F (Form 1040) or you are a partner, you can use the worksheet in Publication 587. File 2011 state taxes free More information. File 2011 state taxes free   For more information about business use of your home, see Publication 587. File 2011 state taxes free Car and Truck Expenses If you use your car or truck in your business, you can deduct the costs of operating and maintaining it. File 2011 state taxes free You generally can deduct either your actual expenses or the standard mileage rate. File 2011 state taxes free Actual expenses. File 2011 state taxes free   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. File 2011 state taxes free You can divide your expenses based on the miles driven for each purpose. File 2011 state taxes free Example. File 2011 state taxes free You are the sole proprietor of a flower shop. File 2011 state taxes free You drove your van 20,000 miles during the year. File 2011 state taxes free 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use. File 2011 state taxes free You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. File 2011 state taxes free Standard mileage rate. File 2011 state taxes free   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. File 2011 state taxes free You can use the standard mileage rate for a vehicle you own or lease. File 2011 state taxes free The standard mileage rate is a specified amount of money you can deduct for each business mile you drive. File 2011 state taxes free It is announced annually by the IRS. File 2011 state taxes free To figure your deduction, multiply your business miles by the standard mileage rate for the year. File 2011 state taxes free    Generally, if you use the standard mileage rate, you cannot deduct your actual expenses. File 2011 state taxes free However, you may be able to deduct business-related parking fees, tolls, interest on your car loan, and certain state and local taxes. File 2011 state taxes free Choosing the standard mileage rate. File 2011 state taxes free   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. File 2011 state taxes free In later years, you can choose to use either the standard mileage rate or actual expenses. File 2011 state taxes free   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). File 2011 state taxes free Additional information. File 2011 state taxes free   For more information about the rules for claiming car and truck expenses, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. File 2011 state taxes free Recordkeeping This part explains why you must keep records, what kinds of records you must keep, and how to keep them. File 2011 state taxes free It also explains how long you must keep your records for federal tax purposes. File 2011 state taxes free A sample recordkeeping system is illustrated at the end of this part. File 2011 state taxes free Why Keep Records? Everyone in business must keep records. File 2011 state taxes free Good records will help you do the following. File 2011 state taxes free Monitor the progress of your business. File 2011 state taxes free   You need good records to monitor the progress of your business. File 2011 state taxes free Records can show whether your business is improving, which items are selling, or what changes you need to make. File 2011 state taxes free Good records can increase the likelihood of business success. File 2011 state taxes free Prepare your financial statements. File 2011 state taxes free   You need good records to prepare accurate financial statements. File 2011 state taxes free These include income (profit and loss) statements and balance sheets. File 2011 state taxes free These statements can help you in dealing with your bank or creditors and help you manage your business. File 2011 state taxes free An income statement shows the income and expenses of the business for a given period of time. File 2011 state taxes free A balance sheet shows the assets, liabilities, and your equity in the business on a given date. File 2011 state taxes free Identify source of receipts. File 2011 state taxes free   You will receive money or property from many sources. File 2011 state taxes free Your records can identify the source of your receipts. File 2011 state taxes free You need this information to separate business from nonbusiness receipts and taxable from nontaxable income. File 2011 state taxes free Keep track of deductible expenses. File 2011 state taxes free   You may forget expenses when you prepare your tax return unless you record them when they occur. File 2011 state taxes free Prepare your tax returns. File 2011 state taxes free   You need good records to prepare your tax returns. File 2011 state taxes free These records must support the income, expenses, and credits you report. File 2011 state taxes free Generally, these are the same records you use to monitor your business and prepare your financial statements. File 2011 state taxes free Support items reported on tax returns. File 2011 state taxes free   You must keep your business records available at all times for inspection by the IRS. File 2011 state taxes free If the IRS examines any of your tax returns, you may be asked to explain the items reported. File 2011 state taxes free A complete set of records will speed up the examination. File 2011 state taxes free Kinds of Records To Keep Except in a few cases, the law does not require any specific kind of records. File 2011 state taxes free You can choose any recordkeeping system suited to your business that clearly shows your income and expenses. File 2011 state taxes free The business you are in affects the type of records you need to keep for federal tax purposes. File 2011 state taxes free You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. File 2011 state taxes free See Accounting Method, earlier. File 2011 state taxes free If you are in more than one business, you should keep a complete and separate set of records for each business. File 2011 state taxes free A corporation should keep minutes of board of directors' meetings. File 2011 state taxes free Your recordkeeping system should include a summary of your business transactions. File 2011 state taxes free This summary is ordinarily made in your books (for example, accounting journals and ledgers). File 2011 state taxes free Your books must show your gross income, as well as your deductions and credits. File 2011 state taxes free For most small businesses, the business checkbook (discussed later) is the main source for entries in the business books. File 2011 state taxes free In addition, you must keep supporting documents, explained later. File 2011 state taxes free Electronic records. File 2011 state taxes free   All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. File 2011 state taxes free 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. File 2011 state taxes free 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. File 2011 state taxes free The electronic storage system must index, store, preserve, retrieve and reproduce the electronically stored books and records in legible format. File 2011 state taxes free All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. File 2011 state taxes free Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. File 2011 state taxes free   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. File 2011 state taxes free You still have the responsibility of retaining any other books and records that are required to be retained. File 2011 state taxes free   The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. File 2011 state taxes free This test is not considered an examination and the results must be shared with you. File 2011 state taxes free If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. File 2011 state taxes free 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. File 2011 state taxes free For details on electronic storage system requirements, see Revenue Procedure 97-22, available in Internal Revenue Bulletin 1997-13. File 2011 state taxes free Supporting Documents Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. File 2011 state taxes free Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks. File 2011 state taxes free These documents contain information you need to record in your books. File 2011 state taxes free It is important to keep these documents because they support the entries in your books and on your tax return. File 2011 state taxes free Keep them in an orderly fashion and in a safe place. File 2011 state taxes free For instance, organize them by year and type of income or expense. File 2011 state taxes free Gross receipts. File 2011 state taxes free   Gross receipts are the income you receive from your business. File 2011 state taxes free You should keep supporting documents that show the amounts and sources of your gross receipts. File 2011 state taxes free Documents that show gross receipts include the following. File 2011 state taxes free Cash register tapes. File 2011 state taxes free Bank deposit slips. File 2011 state taxes free Receipt books. File 2011 state taxes free Invoices. File 2011 state taxes free Credit card charge slips. File 2011 state taxes free Forms 1099-MISC. File 2011 state taxes free Purchases. File 2011 state taxes free   Purchases are the items you buy and resell to customers. File 2011 state taxes free If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into finished products. File 2011 state taxes free Your supporting documents should show the amount paid and that the amount was for purchases. File 2011 state taxes free Documents for purchases include the following. File 2011 state taxes free Canceled checks. File 2011 state taxes free Cash register tape receipts. File 2011 state taxes free Credit card sales slips. File 2011 state taxes free Invoices. File 2011 state taxes free These records will help you determine the value of your inventory at the end of the year. File 2011 state taxes free See Publication 538 for information on methods for valuing inventory. File 2011 state taxes free Expenses. File 2011 state taxes free   Expenses are the costs you incur (other than purchases) to carry on your business. File 2011 state taxes free Your supporting documents should show the amount paid and that the amount was for a business expense. File 2011 state taxes free Documents for expenses include the following. File 2011 state taxes free Canceled checks. File 2011 state taxes free Cash register tapes. File 2011 state taxes free Account statements. File 2011 state taxes free Credit card sales slips. File 2011 state taxes free Invoices. File 2011 state taxes free Petty cash slips for small cash payments. File 2011 state taxes free    A petty cash fund allows you to make small payments without having to write checks for small amounts. File 2011 state taxes free 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. File 2011 state taxes free Travel, transportation, entertainment, and gift expenses. File 2011 state taxes free   Specific recordkeeping rules apply to these expenses. File 2011 state taxes free For more information, see Publication 463. File 2011 state taxes free Employment taxes. File 2011 state taxes free   There are specific employment tax records you must keep. File 2011 state taxes free For a list, see Publication 15. File 2011 state taxes free Assets. File 2011 state taxes free   Assets are the property, such as machinery and furniture you own and use in your business. File 2011 state taxes free You must keep records to verify certain information about your business assets. File 2011 state taxes free You need records to figure the annual depreciation and the gain or loss when you sell the assets. File 2011 state taxes free Your records should show the following information. File 2011 state taxes free When and how you acquired the asset. File 2011 state taxes free Purchase price. File 2011 state taxes free Cost of any improvements. File 2011 state taxes free Section 179 deduction taken. File 2011 state taxes free Deductions taken for depreciation. File 2011 state taxes free Deductions taken for casualty losses, such as losses resulting from fires or storms. File 2011 state taxes free How you used the asset. File 2011 state taxes free When and how you disposed of the asset. File 2011 state taxes free Selling price. File 2011 state taxes free Expenses of sale. File 2011 state taxes free   The following documents may show this information. File 2011 state taxes free Purchase and sales invoices. File 2011 state taxes free Real estate closing statements. File 2011 state taxes free Canceled checks. File 2011 state taxes free 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. File 2011 state taxes free These include account statements prepared for the financial institution by a third party. File 2011 state taxes free These account statements must be highly legible. File 2011 state taxes free The following table lists acceptable account statements. File 2011 state taxes free  IF payment is by. File 2011 state taxes free . File 2011 state taxes free . File 2011 state taxes free THEN the statement must show the. File 2011 state taxes free . File 2011 state taxes free . File 2011 state taxes free Check Check number. File 2011 state taxes free Amount. File 2011 state taxes free Payee's name. File 2011 state taxes free Date the check amount was posted to the account by the financial institution. File 2011 state taxes free Electronic funds transfer Amount transferred. File 2011 state taxes free Payee's name. File 2011 state taxes free Date the transfer was posted to the account by the financial institution. File 2011 state taxes free Credit card Amount charged. File 2011 state taxes free Payee's name. File 2011 state taxes free Transaction date. File 2011 state taxes free    Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. File 2011 state taxes free You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost. File 2011 state taxes free Recording Business Transactions A good recordkeeping system includes a summary of your business transactions. File 2011 state taxes free (Your business transactions are shown on the supporting documents just discussed. File 2011 state taxes free ) Business transactions are ordinarily summarized in books called journals and ledgers. File 2011 state taxes free You can buy them at your local stationery or office supply store. File 2011 state taxes free A journal is a book where you record each business transaction shown on your supporting documents. File 2011 state taxes free You may have to keep separate journals for transactions that occur frequently. File 2011 state taxes free A ledger is a book that contains the totals from all of your journals. File 2011 state taxes free It is organized into different accounts. File 2011 state taxes free Whether you keep journals and ledgers and how you keep them depends on the type of business you are in. File 2011 state taxes free For example, a recordkeeping system for a small business might include the following items. File 2011 state taxes free Business checkbook. File 2011 state taxes free Daily summary of cash receipts. File 2011 state taxes free Monthly summary of cash receipts. File 2011 state taxes free Check disbursements journal. File 2011 state taxes free Depreciation worksheet. File 2011 state taxes free Employee compensation record. File 2011 state taxes free The business checkbook is explained next. File 2011 state taxes free The other items are illustrated later under Sample Record System. File 2011 state taxes free The system you use to record business transactions will be more effective if you follow good recordkeeping practices. File 2011 state taxes free For example, record expenses when they occur, and identify the source of recorded receipts. File 2011 state taxes free Generally, it is best to record transactions on a daily basis. File 2011 state taxes free Business checkbook. File 2011 state taxes free   One of the first things you should do when you start a business is open a business checking account. File 2011 state taxes free You should keep your business account separate from your personal checking account. File 2011 state taxes free   The business checkbook is your basic source of information for recording your business expenses. File 2011 state taxes free You should deposit all daily receipts in your business checking account. File 2011 state taxes free You should check your account for errors by reconciling it. File 2011 state taxes free See Reconciling the checking account, later. File 2011 state taxes free   Consider using a checkbook that allows enough space to identify the source of deposits as business income, personal funds, or loans. File 2011 state taxes free You should also note on the deposit slip the source of the deposit and keep copies of all slips. File 2011 state taxes free   You should make all payments by check to document business expenses. File 2011 state taxes free Write checks payable to yourself only when making withdrawals from your business for personal use. File 2011 state taxes free Avoid writing checks payable to cash. File 2011 state taxes free If you must write a check for cash to pay a business expense, include the receipt for the cash payment in your records. File 2011 state taxes free If you cannot get a receipt for a cash payment, you should make an adequate explanation in your records at the time of payment. File 2011 state taxes free    Use the business account for business purposes only. File 2011 state taxes free Indicate the source of deposits and the type of expense in the checkbook. File 2011 state taxes free Reconciling the checking account. File 2011 state taxes free   When you receive your bank statement, make sure the statement, your checkbook, and your books agree. File 2011 state taxes free 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. File 2011 state taxes free   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. File 2011 state taxes free    You should reconcile your checking account each month. File 2011 state taxes free     Before you reconcile your monthly bank statement, check your own figures. File 2011 state taxes free Begin with the balance shown in your checkbook at the end of the previous month. File 2011 state taxes free To this balance, add the total cash deposited during the month and subtract the total cash disbursements. File 2011 state taxes free   After checking your figures, the result should agree with your checkbook balance at the end of the month. File 2011 state taxes free If the result does not agree, you may have made an error in recording a check or deposit. File 2011 state taxes free You can find the error by doing the following. File 2011 state taxes free 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. File 2011 state taxes free 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. File 2011 state taxes free Adding the deposit amounts in your checkbook. File 2011 state taxes free Compare that total with the monthly total in your cash receipt book, if you have one. File 2011 state taxes free If the totals do not agree, check the individual amounts to find any errors. File 2011 state taxes free   If your checkbook and journal entries still disagree, then refigure the running balance in your checkbook to make sure additions and subtractions are correct. File 2011 state taxes free   When your checkbook balance agrees with the balance figured from the journal entries, you may begin reconciling your checkbook with the bank statement. File 2011 state taxes free Many banks print a reconciliation worksheet on the back of the statement. File 2011 state taxes free   To reconcile your account, follow these steps. File 2011 state taxes free Compare the deposits listed on the bank statement with the deposits shown in your checkbook. File 2011 state taxes free Note all differences in the dollar amounts. File 2011 state taxes free Compare each canceled check, including both check number and dollar amount, with the entry in your checkbook. File 2011 state taxes free Note all differences in the dollar amounts. File 2011 state taxes free Mark the check number in the checkbook as having cleared the bank. File 2011 state taxes free After accounting for all checks returned by the bank, those not marked in your checkbook are your outstanding checks. File 2011 state taxes free Prepare a bank reconciliation. File 2011 state taxes free One is illustrated later under Sample Record System. File 2011 state taxes free Update your checkbook and journals for items shown on the reconciliation as not recorded (such as service charges) or recorded incorrectly. File 2011 state taxes free At this point, the adjusted bank statement balance should equal your adjusted checkbook balance. File 2011 state taxes free If you still have differences, check the previous steps to find the errors. File 2011 state taxes free   Table 3. File 2011 state taxes free Period of Limitations IF you. File 2011 state taxes free . File 2011 state taxes free . File 2011 state taxes free   THEN the period is. File 2011 state taxes free . File 2011 state taxes free . File 2011 state taxes free 1. File 2011 state taxes free Owe additional tax and situations (2), (3), and (4), below, do not apply to you   3 years 2. File 2011 state taxes free 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. File 2011 state taxes free File a fraudulent return   Not limited 4. File 2011 state taxes free Do not file a return   Not limited 5. File 2011 state taxes free File a claim for credit or refund after you filed your return   Later of: 3 years or  2 years after tax   was paid 6. File 2011 state taxes free 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. File 2011 state taxes free The single-entry system of bookkeeping is the simplest to maintain, but it may not be suitable for everyone. File 2011 state taxes free You may find the double-entry system better because it has built-in checks and balances to assure accuracy and control. File 2011 state taxes free Single-entry. File 2011 state taxes free   A single-entry system is based on the income statement (profit or loss statement). File 2011 state taxes free It can be a simple and practical system if you are starting a small business. File 2011 state taxes free 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. File 2011 state taxes free Double-entry. File 2011 state taxes free   A double-entry bookkeeping system uses journals and ledgers. File 2011 state taxes free Transactions are first entered in a journal and then posted to ledger accounts. File 2011 state taxes free These accounts show income, expenses, assets (property a business owns), liabilities (debts of a business), and net worth (excess of assets over liabilities). File 2011 state taxes free You close income and expense accounts at the end of each tax year. File 2011 state taxes free You keep asset, liability, and net worth accounts open on a permanent basis. File 2011 state taxes free   In the double-entry system, each account has a left side for debits and a right side for credits. File 2011 state taxes free It is self-balancing because you record every transaction as a debit entry in one account and as a credit entry in another. File 2011 state taxes free   Under this system, the total debits must equal the total credits after you post the journal entries to the ledger accounts. File 2011 state taxes free If the amounts do not balance, you have made an error and you must find and correct it. File 2011 state taxes free   An example of a journal entry exhibiting a payment of rent in October is shown next. File 2011 state taxes free General Journal Date Description of Entry Debit  Credit Oct. File 2011 state taxes free 5 Rent expense 780. File 2011 state taxes free 00     Cash   780. File 2011 state taxes free 00                 Computerized System There are computer software packages you can use for recordkeeping. File 2011 state taxes free They can be purchased in many retail stores. File 2011 state taxes free These packages are very helpful and relatively easy to use; they require very little knowledge of bookkeeping and accounting. File 2011 state taxes free 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. File 2011 state taxes free To meet this qualification, the machine-sensible records must reconcile with your books and return. File 2011 state taxes free These records must provide enough detail to identify the underlying source documents. File 2011 state taxes free You must also keep all machine-sensible records and a complete description of the computerized portion of your recordkeeping system. File 2011 state taxes free This documentation must be sufficiently detailed to show all of the following items. File 2011 state taxes free Functions being performed as the data flows through the system. File 2011 state taxes free Controls used to ensure accurate and reliable processing. File 2011 state taxes free Controls used to prevent the unauthorized addition, alteration, or deletion of retained records. File 2011 state taxes free Charts of accounts and detailed account descriptions. File 2011 state taxes free See Revenue Procedure 98-25 in Cumulative Bulletin 1998-1 for more information. File 2011 state taxes free 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. File 2011 state taxes free 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. File 2011 state taxes free 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. File 2011 state taxes free Table 3 contains the periods of limitations that apply to income tax returns. File 2011 state taxes free Unless otherwise stated, the years refer to the period after the return was filed. File 2011 state taxes free Returns filed before the due date are treated as filed on the due date. File 2011 state taxes free Keep copies of your filed tax returns. File 2011 state taxes free They help in preparing future tax returns and making computations if you file an amended return. File 2011 state taxes free Employment taxes. File 2011 state taxes free   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. File 2011 state taxes free For more information about recordkeeping for employment taxes, see Publication 15. File 2011 state taxes free Assets. File 2011 state taxes free   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. File 2011 state taxes free 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. File 2011 state taxes free   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. File 2011 state taxes free 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. File 2011 state taxes free Records for nontax purposes. File 2011 state taxes free   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. File 2011 state taxes free For example, your insurance company or creditors may require you to keep them longer than the IRS does. File 2011 state taxes free 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. File 2011 state taxes free Henry uses part-time help, has no inventory of items held for sale, and uses the cash method of accounting. File 2011 state taxes free These sample records should not be viewed as a recommendation of how to keep your records. File 2011 state taxes free They are intended only to show how one business keeps its records. File 2011 state taxes free 1. File 2011 state taxes free Daily Summary of Cash Receipts This summary is a record of cash sales for the day. File 2011 state taxes free 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. File 2011 state taxes free Henry takes the cash sales entry from his cash register tape. File 2011 state taxes free If he had no cash register, he would simply total his cash sale slips and any other cash received that day. File 2011 state taxes free He carries the total receipts shown in this summary for January 3 ($267. File 2011 state taxes free 80), including cash sales ($263. File 2011 state taxes free 60) and sales tax ($4. File 2011 state taxes free 20), to the Monthly Summary of Cash Receipts. File 2011 state taxes free Petty cash fund. File 2011 state taxes free   Henry uses a petty cash fund to make small payments without having to write checks for small amounts. File 2011 state taxes free 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. File 2011 state taxes free He sets up a fixed amount ($50) in his petty cash fund. File 2011 state taxes free The total of the unspent petty cash and the amounts on the petty cash slips should equal the fixed amount of the fund. File 2011 state taxes free 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. File 2011 state taxes free (See the Check Disbursements Journal entry for check number 92. File 2011 state taxes free ) This restores the fund to its fixed amount of $50. File 2011 state taxes free He then summarizes the slips and enters them in the proper columns in the monthly check disbursements journal. File 2011 state taxes free 2. File 2011 state taxes free Monthly Summary of Cash Receipts This shows the income activity for the month. File 2011 state taxes free Henry carries the total monthly net sales shown in this summary for January ($4,865. File 2011 state taxes free 05) to his Annual Summary. File 2011 state taxes free 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. File 2011 state taxes free He cannot take a deduction for sales tax turned over to the state because he only collected the tax. File 2011 state taxes free He does not include the tax in his income. File 2011 state taxes free 3. File 2011 state taxes free Check Disbursements Journal Henry enters checks drawn on the business checking account in the Check Disbursements Journal each day. File 2011 state taxes free All checks are prenumbered and each check number is listed and accounted for in the column provided in the journal. File 2011 state taxes free Frequent expenses have their own headings across the sheet. File 2011 state taxes free He enters in a separate column expenses that require comparatively numerous or large payments each month, such as materials, gross payroll, and rent. File 2011 state taxes free Under the General Accounts column, he enters small expenses that normally have only one or two monthly payments, such as licenses and postage. File 2011 state taxes free Henry does not pay personal or nonbusiness expenses by checks drawn on the business account. File 2011 state taxes free If he did, he would record them in the journal, even though he could not deduct them as business expenses. File 2011 state taxes free Henry carries the January total of expenses for materials ($1,083. File 2011 state taxes free 50) to the Annual Summary. File 2011 state taxes free Similarly, he enters the monthly total of expenses for telephone, truck/auto, etc. File 2011 state taxes free , in the appropriate columns of that summary. File 2011 state taxes free 4. File 2011 state taxes free Employee Compensation Record This record shows the following information. File 2011 state taxes free The number of hours Henry's employee worked in a pay period. File 2011 state taxes free The employee's total pay for the period. File 2011 state taxes free The deductions Henry withheld in figuring the employee's net pay. File 2011 state taxes free The monthly gross payroll. File 2011 state taxes free Henry carries the January gross payroll ($520) to the Annual Summary. File 2011 state taxes free 5. File 2011 state taxes free Annual Summary This annual summary of monthly cash receipts and expense totals provides the final amounts to enter on Henry's tax return. File 2011 state taxes free He figures the cash receipts total from the total of monthly cash receipts shown in the Monthly Summary of Cash Receipts. File 2011 state taxes free He figures the expense totals from the totals of monthly expense items shown in the Check Disbursements Journal. File 2011 state taxes free As in the journal, he keeps each major expense in a separate column. File 2011 state taxes free Henry carries the cash receipts total shown in the annual summary ($47,440. File 2011 state taxes free 9
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The File 2011 State Taxes Free

File 2011 state taxes free 5. File 2011 state taxes free   Illustrated Examples Table of Contents Illustrated Example of Form 4563Line 1. File 2011 state taxes free Line 2. File 2011 state taxes free Lines 3a and 3b. File 2011 state taxes free Lines 4a and 4b. File 2011 state taxes free Line 5. File 2011 state taxes free Line 6. File 2011 state taxes free Line 7. File 2011 state taxes free Line 9. File 2011 state taxes free Line 15. File 2011 state taxes free Illustrated Example of Form 5074Part I. File 2011 state taxes free Part II. File 2011 state taxes free Part III. File 2011 state taxes free Illustrated Example of Form 8689Part I. File 2011 state taxes free Part II. File 2011 state taxes free Part III. File 2011 state taxes free Part IV. File 2011 state taxes free Use the following examples to help you complete the correct attachment to your Form 1040. File 2011 state taxes free The completed form for each example is shown on the pages that follow. File 2011 state taxes free Illustrated Example of Form 4563 John Black is a U. File 2011 state taxes free S. File 2011 state taxes free citizen, single, and under 65. File 2011 state taxes free He was a bona fide resident of American Samoa during all of 2013. File 2011 state taxes free John must file Form 1040 because his gross income from sources outside the possessions ($10,000 of dividends from U. File 2011 state taxes free S. File 2011 state taxes free corporations) is more than his adjusted filing requirement for single filers under 65. File 2011 state taxes free (See Filing Requirement if Possession Income Is Excluded in chapter 4. File 2011 state taxes free ) Because he must file Form 1040 (not illustrated), he fills out Form 4563 to determine the amount of income from American Samoa he can exclude. File 2011 state taxes free See Bona Fide Resident of American Samoa in chapter 3. File 2011 state taxes free Completing Form 4563. File 2011 state taxes free   John enters his name and social security number at the top of the form. File 2011 state taxes free Line 1. File 2011 state taxes free   On Form 4563 (see later), John enters the date his bona fide residence began in American Samoa, June 2, 2012. File 2011 state taxes free Because he is still a bona fide resident, he enters “not ended” in the second blank space. File 2011 state taxes free Line 2. File 2011 state taxes free   He checks the box labeled “Rented house or apartment” to describe his type of living quarters in American Samoa. File 2011 state taxes free Lines 3a and 3b. File 2011 state taxes free   He checks “No” on line 3a because no family members lived with him. File 2011 state taxes free He leaves line 3b blank. File 2011 state taxes free Lines 4a and 4b. File 2011 state taxes free   He checks “No” on line 4a because he did not maintain a home outside American Samoa. File 2011 state taxes free He leaves line 4b blank. File 2011 state taxes free Line 5. File 2011 state taxes free   He enters the name and address of his employer, Samoa Products Co. File 2011 state taxes free It is a private American Samoa corporation. File 2011 state taxes free Line 6. File 2011 state taxes free   He enters the dates of his 2-week vacation to New Zealand from November 11 to November 25. File 2011 state taxes free That was his only trip outside American Samoa during the year. File 2011 state taxes free Line 7. File 2011 state taxes free   He enters the $24,000 in wages he received from Samoa Products Co. File 2011 state taxes free Line 9. File 2011 state taxes free   He received $220 in dividends from an American Samoa corporation, which he enters here. File 2011 state taxes free He also received $10,000 of dividends from a U. File 2011 state taxes free S. File 2011 state taxes free corporation, but he will enter that amount only on his Form 1040 because the U. File 2011 state taxes free S. File 2011 state taxes free dividends do not qualify for the possession exclusion. File 2011 state taxes free Line 15. File 2011 state taxes free   John totals the amounts on lines 7 and 9 to get the amount he can exclude from his gross income in 2013. File 2011 state taxes free He will not enter his excluded income on Form 1040. File 2011 state taxes free However, he will attach his completed Form 4563 to his Form 1040. File 2011 state taxes free Illustrated Example of Form 5074 Tracy Grey is a U. File 2011 state taxes free S. File 2011 state taxes free citizen who is a self-employed fisheries consultant with a tax home in New York. File 2011 state taxes free Her only income for 2013 was net self-employment income of $80,000. File 2011 state taxes free Of the $80,000, $20,000 was from consulting work in Guam and the rest was earned in the United States. File 2011 state taxes free Thinking she would owe tax to Guam on the $20,000, Tracy made estimated tax payments of $1,409 to Guam. File 2011 state taxes free She was not a bona fide resident of Guam during 2013. File 2011 state taxes free Tracy completes Form 1040 (not illustrated), reporting her worldwide income. File 2011 state taxes free Because the adjusted gross income on her Form 1040 was $50,000 or more and at least $5,000 of her gross income is from Guam, Tracy must file Form 5074 with her Form 1040. File 2011 state taxes free All amounts reported on Form 5074 are also reported on her Form 1040. File 2011 state taxes free See U. File 2011 state taxes free S. File 2011 state taxes free Citizen or Resident Alien (Other Than a Bona Fide Resident of Guam) in chapter 3. File 2011 state taxes free Completing Form 5074. File 2011 state taxes free   Tracy enters her name and social security number at the top of the form. File 2011 state taxes free Part I. File 2011 state taxes free   On Form 5074 (see later), Tracy enters her self-employment income from Guam ($20,000) on line 6. File 2011 state taxes free She has no other income from Guam, so the total on line 16 is $20,000. File 2011 state taxes free Part II. File 2011 state taxes free   Tracy's only adjustment in Part II is the deductible part of the self-employment tax on her net income earned in Guam. File 2011 state taxes free She enters $1,413 on line 21 and line 28. File 2011 state taxes free Her adjusted gross income on line 29 is $18,587. File 2011 state taxes free Part III. File 2011 state taxes free   Tracy made estimated tax payments of $1,409. File 2011 state taxes free She enters this amount on line 30, and again on line 34 as the total payments. File 2011 state taxes free Illustrated Example of Form 8689 Juan and Carla Moreno live and work in the United States. File 2011 state taxes free In 2013, they received $14,400 in income from the rental of a condominium they own in the U. File 2011 state taxes free S. File 2011 state taxes free Virgin Islands (USVI). File 2011 state taxes free The rental income was deposited in a bank in the USVI and they received $500 of interest on this income. File 2011 state taxes free They were not bona fide residents of the USVI during the entire tax year. File 2011 state taxes free The Morenos complete Form 1040 (not illustrated), reporting their income from all sources, including their interest income and the income and expenses from their USVI rental property (reported on Schedule E (Form 1040)). File 2011 state taxes free The Morenos take the standard deduction for married filing jointly, both are under 65, and they have no dependents. File 2011 state taxes free The Morenos also complete Form 8689 to determine how much of their U. File 2011 state taxes free S. File 2011 state taxes free tax shown on Form 1040, line 61 (with certain adjustments), must be paid to the U. File 2011 state taxes free S. File 2011 state taxes free Virgin Islands. File 2011 state taxes free See U. File 2011 state taxes free S. File 2011 state taxes free Citizen or Resident Alien (Other Than a Bona Fide Resident of the USVI) in chapter 3. File 2011 state taxes free The Morenos file their Form 1040, attaching Form 8689 and all other schedules, with the Internal Revenue Service. File 2011 state taxes free At the same time, they send a copy of their Form 1040 with all attachments, including Form 8689, to the Virgin Islands Bureau of Internal Revenue. File 2011 state taxes free The Virgin Islands Bureau of Internal Revenue will process this copy. File 2011 state taxes free Completing Form 8689. File 2011 state taxes free   Juan and Carla enter their names and Juan's social security number at the top of the form. File 2011 state taxes free Part I. File 2011 state taxes free   The Morenos enter their income from the USVI in Part I (see later). File 2011 state taxes free The interest income is entered on line 2 and the net rental income of $6,200 ($14,400 of rental income minus $8,200 of rental expenses) is entered on line 11. File 2011 state taxes free The Morenos' total USVI income of $6,700 is entered on line 16. File 2011 state taxes free Part II. File 2011 state taxes free   The Morenos have no adjustments to their USVI income, so they enter zero (-0-) on line 28, and $6,700 on line 29. File 2011 state taxes free Their USVI adjusted gross income (AGI) is $6,700. File 2011 state taxes free Part III. File 2011 state taxes free   On line 30, the Morenos enter the amount from Form 1040, line 61 ($4,539). File 2011 state taxes free Their Form 1040 does not show any entries required on line 31, so they leave that line blank and enter $4,539 on line 32. File 2011 state taxes free   The Morenos enter their worldwide AGI, $54,901 (Form 1040, line 38), on line 33. File 2011 state taxes free Next, they find what percentage of their AGI is from USVI sources ($6,700 ÷ $54,901 = 0. File 2011 state taxes free 122) and enter that as a decimal on line 34. File 2011 state taxes free They then apply that percentage to the U. File 2011 state taxes free S. File 2011 state taxes free tax entered on line 32 to find the amount of U. File 2011 state taxes free S. File 2011 state taxes free tax allocated to USVI income ($4,539 x 0. File 2011 state taxes free 122 = $554), and enter that amount on line 35. File 2011 state taxes free Part IV. File 2011 state taxes free   Part IV is used to show payments of income tax to the USVI only. File 2011 state taxes free The Morenos had no tax withheld by the U. File 2011 state taxes free S. File 2011 state taxes free Virgin Islands, but made estimated tax payments to the USVI of $400, which they entered on lines 37 and 39. File 2011 state taxes free They include this amount ($400) in the total payments on Form 1040, line 72. File 2011 state taxes free On the dotted line next to the entry space for line 72, they enter “Form 8689” and show the amount. File 2011 state taxes free The Morenos do not complete Form 1116 because they receive credit on Form 1040, line 72, for the tax paid to the USVI. File 2011 state taxes free   The income tax they owe to the USVI ($154) is shown on Form 8689, line 44. File 2011 state taxes free They enter this amount on line 45. File 2011 state taxes free They also include this additional amount ($154) on the dotted line next to the entry space and in the total on Form 1040, line 72. File 2011 state taxes free The Morenos will pay their USVI tax at the same time they file the copy of their U. File 2011 state taxes free S. File 2011 state taxes free income tax return with the U. File 2011 state taxes free S. File 2011 state taxes free Virgin Islands. File 2011 state taxes free This image is too large to be displayed in the current screen. File 2011 state taxes free Please click the link to view the image. File 2011 state taxes free Form 4563, page 1 for John Black This image is too large to be displayed in the current screen. File 2011 state taxes free Please click the link to view the image. File 2011 state taxes free Form 5074, for Tracy Grey This image is too large to be displayed in the current screen. File 2011 state taxes free Please click the link to view the image. File 2011 state taxes free Form 8689, page 1 for Juan and Carla Moreno Prev  Up  Next   Home   More Online Publications