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Irs Tax Forms 2012 1040a

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Irs Tax Forms 2012 1040a

Irs tax forms 2012 1040a Publication 575 - Additional Material Table of Contents Worksheet A. Irs tax forms 2012 1040a Simplified Method 1. Irs tax forms 2012 1040a Enter the total pension or annuity payments received this year. Irs tax forms 2012 1040a Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. Irs tax forms 2012 1040a   2. Irs tax forms 2012 1040a Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion. Irs tax forms 2012 1040a * See Cost (Investment in the Contract) , earlier 2. Irs tax forms 2012 1040a   Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). Irs tax forms 2012 1040a Otherwise, go to line 3. Irs tax forms 2012 1040a   3. Irs tax forms 2012 1040a Enter the appropriate number from Table 1 below. Irs tax forms 2012 1040a But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below. Irs tax forms 2012 1040a 3. Irs tax forms 2012 1040a   4. Irs tax forms 2012 1040a Divide line 2 by the number on line 3 4. Irs tax forms 2012 1040a   5. Irs tax forms 2012 1040a Multiply line 4 by the number of months for which this year's payments were made. Irs tax forms 2012 1040a If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Irs tax forms 2012 1040a Otherwise, go to line 6 5. Irs tax forms 2012 1040a   6. Irs tax forms 2012 1040a Enter any amounts previously recovered tax free in years after 1986. Irs tax forms 2012 1040a This is the amount shown on line 10 of your worksheet for last year 6. Irs tax forms 2012 1040a   7. Irs tax forms 2012 1040a Subtract line 6 from line 2 7. Irs tax forms 2012 1040a   8. Irs tax forms 2012 1040a Enter the smaller of line 5 or line 7 8. Irs tax forms 2012 1040a   9. Irs tax forms 2012 1040a Taxable amount for year. Irs tax forms 2012 1040a Subtract line 8 from line 1. Irs tax forms 2012 1040a Enter the result, but not less than zero. Irs tax forms 2012 1040a Also, add this amount to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Irs tax forms 2012 1040a  Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. Irs tax forms 2012 1040a If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers , earlier, before entering an amount on your tax return 9. Irs tax forms 2012 1040a   10. Irs tax forms 2012 1040a Was your annuity starting date before 1987? □ Yes. Irs tax forms 2012 1040a STOP. Irs tax forms 2012 1040a Do not complete the rest of this worksheet. Irs tax forms 2012 1040a  □ No. Irs tax forms 2012 1040a Add lines 6 and 8. Irs tax forms 2012 1040a This is the amount you have recovered tax free through 2013. Irs tax forms 2012 1040a You will need this number if you need to fill out this worksheet next year 10. Irs tax forms 2012 1040a   11. Irs tax forms 2012 1040a Balance of cost to be recovered. Irs tax forms 2012 1040a Subtract line 10 from line 2. Irs tax forms 2012 1040a If zero, you will not have to complete this worksheet next year. Irs tax forms 2012 1040a The payments you receive next year will generally be fully taxable 11. Irs tax forms 2012 1040a   * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. Irs tax forms 2012 1040a Table 1 for Line 3 Above   IF the age at  annuity starting date was . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a         AND your annuity starting date was—     BEFORE November 19, 1996,  enter on line 3 . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a AFTER November 18, 1996,  enter on line 3 . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a   55 or under 300 360   56-60 260 310   61-65 240 260   66-70 170 210   71 or over 120 160 Table 2 for Line 3 Above   IF the combined ages at annuity starting date were . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a   THEN enter on line 3 . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a         110 or under   410         111-120   360         121-130   310         131-140   260         141 or over   210       Prev  Up  Next   Home   More Online Publications
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Where to File Paper Tax Returns - With or Without a Payment

Where to File Tax Returns - Addresses Listed by Return Type
Where to file addresses listed by return type for use during calendar year 2013.

Where to File Certain Elections, Statements, Returns and Other Documents
This page provides up-to-date information on filing addresses for certain elections, statements, returns and other documents required by the Code of Federal Regulations (CFR) Title 26

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Where to send certain payments and applications other than tax returns. This page provides a quick guide for where to send certain non-return forms, applications, and payments.

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Where to file addresses for tax exempt and government entities.

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Page Last Reviewed or Updated: 13-Feb-2014

The Irs Tax Forms 2012 1040a

Irs tax forms 2012 1040a Publication 583 - Main Content Table of Contents What New Business Owners Need To Know Forms of BusinessMore information. Irs tax forms 2012 1040a More information. Irs tax forms 2012 1040a Exception—Community Income. Irs tax forms 2012 1040a Exception—Qualified joint venture. Irs tax forms 2012 1040a More information. Irs tax forms 2012 1040a More information. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Table 1 can help you learn what those responsibilities are. Irs tax forms 2012 1040a Ask yourself each question listed in the table, then see the related discussion to find the answer. Irs tax forms 2012 1040a In addition to knowing about federal taxes, you need to make some basic business decisions. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a For information on how to contact the SBA, see How to Get More Information, later. Irs tax forms 2012 1040a Forms of Business The most common forms of business are the sole proprietorship, partnership, and corporation. Irs tax forms 2012 1040a When beginning a business, you must decide which form of business to use. Irs tax forms 2012 1040a Legal and tax considerations enter into this decision. Irs tax forms 2012 1040a Only tax considerations are discussed in this publication. Irs tax forms 2012 1040a Your form of business determines which income tax return form you have to file. Irs tax forms 2012 1040a See Table 2 to find out which form you have to file. Irs tax forms 2012 1040a Sole proprietorships. Irs tax forms 2012 1040a   A sole proprietorship is an unincorporated business that is owned by one individual. Irs tax forms 2012 1040a It is the simplest form of business organization to start and maintain. Irs tax forms 2012 1040a The business has no existence apart from you, the owner. Irs tax forms 2012 1040a Its liabilities are your personal liabilities. Irs tax forms 2012 1040a You undertake the risks of the business for all assets owned, whether or not used in the business. Irs tax forms 2012 1040a You include the income and expenses of the business on your personal tax return. Irs tax forms 2012 1040a More information. Irs tax forms 2012 1040a   For more information on sole proprietorships, see Publication 334, Tax Guide for Small Business. Irs tax forms 2012 1040a If you are a farmer, see Publication 225, Farmer's Tax Guide. Irs tax forms 2012 1040a Partnerships. Irs tax forms 2012 1040a   A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Irs tax forms 2012 1040a Each person contributes money, property, labor, or skill, and expects to share in the profits and losses of the business. Irs tax forms 2012 1040a   A partnership must file an annual information return to report the income, deductions, gains, losses, etc. Irs tax forms 2012 1040a , from its operations, but it does not pay income tax. Irs tax forms 2012 1040a Instead, it “passes through” any profits or losses to its partners. Irs tax forms 2012 1040a Each partner includes his or her share of the partnership's items on his or her tax return. Irs tax forms 2012 1040a More information. Irs tax forms 2012 1040a   For more information on partnerships, see Publication 541, Partnerships. Irs tax forms 2012 1040a Husband and wife business. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a Do not use Schedule C or C-EZ. Irs tax forms 2012 1040a Instead, file Form 1065, U. Irs tax forms 2012 1040a S. Irs tax forms 2012 1040a Return of Partnership Income. Irs tax forms 2012 1040a For more information, see Publication 541, Partnerships. Irs tax forms 2012 1040a Exception—Community Income. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a S. Irs tax forms 2012 1040a possession, you can treat the business either as a sole proprietorship or a partnership. Irs tax forms 2012 1040a The only states with community property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Irs tax forms 2012 1040a A change in your reporting position will be treated as a conversion of the entity. Irs tax forms 2012 1040a Exception—Qualified joint venture. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a For an explanation of "material participation," see the Instructions for Schedule C, line G. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a Each of you must file a separate Schedule C or C-EZ and a separate Schedule SE. Irs tax forms 2012 1040a For more information, see Qualified Joint Venture in the Instructions for Schedule SE. Irs tax forms 2012 1040a Corporations. Irs tax forms 2012 1040a   In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. Irs tax forms 2012 1040a A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. Irs tax forms 2012 1040a A corporation can also take special deductions. Irs tax forms 2012 1040a   The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. Irs tax forms 2012 1040a However, shareholders cannot deduct any loss of the corporation. Irs tax forms 2012 1040a More information. Irs tax forms 2012 1040a   For more information on corporations, see Publication 542, Corporations. Irs tax forms 2012 1040a S corporations. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a More information. Irs tax forms 2012 1040a   For more information on S corporations, see the instructions for Form 2553, Election by a Small Business Corporation, and Form 1120S, U. Irs tax forms 2012 1040a S. Irs tax forms 2012 1040a Income Tax Return for an S Corporation. Irs tax forms 2012 1040a Limited liability company. Irs tax forms 2012 1040a   A limited liability company (LLC) is an entity formed under state law by filing articles of organization as an LLC. Irs tax forms 2012 1040a The members of an LLC are not personally liable for its debts. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a 7701-3. Irs tax forms 2012 1040a For more information, see the instructions for Form 8832, Entity Classification Election. Irs tax forms 2012 1040a Identification Numbers You must have a taxpayer identification number so the IRS can process your returns. Irs tax forms 2012 1040a The two most common kinds of taxpayer identification numbers are the social security number (SSN) and the employer identification number (EIN). Irs tax forms 2012 1040a An SSN is issued to individuals by the Social Security Administration (SSA) and is in the following format: 000–00–0000. Irs tax forms 2012 1040a An EIN is issued to individuals (sole proprietors), partnerships, corporations, and other entities by the IRS and is in the following format: 00–0000000. Irs tax forms 2012 1040a You must include your taxpayer identification number (SSN or EIN) on all returns and other documents you send to the IRS. Irs tax forms 2012 1040a You must also furnish your number to other persons who use your identification number on any returns or documents they send to the IRS. Irs tax forms 2012 1040a This includes returns or documents filed to report the following information. Irs tax forms 2012 1040a Interest, dividends, royalties, etc. Irs tax forms 2012 1040a , paid to you. Irs tax forms 2012 1040a Any amount paid to you as a dependent care provider. Irs tax forms 2012 1040a Certain other amounts paid to you that total $600 or more for the year. Irs tax forms 2012 1040a If you do not furnish your identification number as required, you may be subject to penalties. Irs tax forms 2012 1040a See Penalties, later. Irs tax forms 2012 1040a Employer Identification Number (EIN) EINs are used to identify the tax accounts of employers, certain sole proprietors, corporations, partnerships, estates, trusts, and other entities. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Applying for an EIN. Irs tax forms 2012 1040a   You may apply for an EIN: Online—Click on the EIN link at www. Irs tax forms 2012 1040a irs. Irs tax forms 2012 1040a gov/businesses/small. Irs tax forms 2012 1040a The EIN is issued immediately once the application information is validated. Irs tax forms 2012 1040a By telephone at 1-800-829-4933. Irs tax forms 2012 1040a By mailing or faxing Form SS-4, Application for Employer Identification Number. Irs tax forms 2012 1040a When to apply. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a If you apply by mail, file Form SS-4 at least 4 weeks before you need an EIN. Irs tax forms 2012 1040a If you apply by telephone or through the IRS website, you can get an EIN immediately. Irs tax forms 2012 1040a If you apply by fax, you can get an EIN within 4 business days. Irs tax forms 2012 1040a   If you do not receive your EIN by the time a return is due, file your return anyway. Irs tax forms 2012 1040a Write “Applied for” and the date you applied for the number in the space for the EIN. Irs tax forms 2012 1040a Do not use your social security number as a substitute for an EIN on your tax returns. Irs tax forms 2012 1040a More than one EIN. Irs tax forms 2012 1040a   You should have only one EIN. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. Irs tax forms 2012 1040a The IRS will tell you which number to use. Irs tax forms 2012 1040a More information. Irs tax forms 2012 1040a   For more information about EINs, see Publication 1635, Understanding Your EIN. Irs tax forms 2012 1040a 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). Irs tax forms 2012 1040a The forms used to report these payments must include the payee's identification number. Irs tax forms 2012 1040a Employee. Irs tax forms 2012 1040a   If you have employees, you must get an SSN from each of them. Irs tax forms 2012 1040a Record the name and SSN of each employee exactly as they are shown on the employee's social security card. Irs tax forms 2012 1040a If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. Irs tax forms 2012 1040a This may occur, for example, if the employee's name has changed due to marriage or divorce. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a This form is available at SSA offices or by calling 1-800-772-1213. Irs tax forms 2012 1040a It is also available from the SSA website at www. Irs tax forms 2012 1040a ssa. Irs tax forms 2012 1040a gov. Irs tax forms 2012 1040a Other payee. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a If you make reportable payments to an organization, such as a corporation or partnership, you must get its EIN. Irs tax forms 2012 1040a   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. Irs tax forms 2012 1040a This form is available from IRS offices or by calling 1-800-829-3676. Irs tax forms 2012 1040a It is also available from the IRS website at IRS. Irs tax forms 2012 1040a gov. Irs tax forms 2012 1040a    If the payee does not provide you with an identification number, you may have to withhold part of the payments as backup withholding. Irs tax forms 2012 1040a For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. Irs tax forms 2012 1040a Tax Year You must figure your taxable income and file an income tax return based on an annual accounting period called a tax year. Irs tax forms 2012 1040a A tax year is usually 12 consecutive months. Irs tax forms 2012 1040a There are two kinds of tax years. Irs tax forms 2012 1040a Calendar tax year. Irs tax forms 2012 1040a A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. Irs tax forms 2012 1040a Fiscal tax year. Irs tax forms 2012 1040a A fiscal tax year is 12 consecutive months ending on the last day of any month except December. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a You must use a calendar tax year if: You keep no books. Irs tax forms 2012 1040a You have no annual accounting period. Irs tax forms 2012 1040a Your present tax year does not qualify as a fiscal year. Irs tax forms 2012 1040a You are required to use a calendar year by a provision of the Internal Revenue Code or the Income Tax Regulations. Irs tax forms 2012 1040a For more information, see Publication 538, Accounting Periods and Methods. Irs tax forms 2012 1040a First-time filer. Irs tax forms 2012 1040a   If you have never filed an income tax return, you can adopt either a calendar tax year or a fiscal tax year. Irs tax forms 2012 1040a You adopt a tax year by filing your first income tax return using that tax year. Irs tax forms 2012 1040a You have not adopted a tax year if you merely did any of the following. Irs tax forms 2012 1040a Filed an application for an extension of time to file an income tax return. Irs tax forms 2012 1040a Filed an application for an employer identification number. Irs tax forms 2012 1040a Paid estimated taxes for that tax year. Irs tax forms 2012 1040a Changing your tax year. Irs tax forms 2012 1040a   Once you have adopted your tax year, you may have to get IRS approval to change it. Irs tax forms 2012 1040a To get approval, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year. Irs tax forms 2012 1040a You may have to pay a fee. Irs tax forms 2012 1040a For more information, see Publication 538. Irs tax forms 2012 1040a Accounting Method An accounting method is a set of rules used to determine when and how income and expenses are reported. Irs tax forms 2012 1040a You choose an accounting method for your business when you file your first income tax return. Irs tax forms 2012 1040a There are two basic accounting methods. Irs tax forms 2012 1040a Cash method. Irs tax forms 2012 1040a Under the cash method, you report income in the tax year you receive it. Irs tax forms 2012 1040a You usually deduct or capitalize expenses in the tax year you pay them. Irs tax forms 2012 1040a Accrual method. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a You deduct or capitalize expenses in the tax year you incur them, whether or not you pay them that year. Irs tax forms 2012 1040a For other methods, see Publication 538. Irs tax forms 2012 1040a If you need inventories to show income correctly, you must generally use an accrual method of accounting for purchases and sales. Irs tax forms 2012 1040a Inventories include goods held for sale in the normal course of business. Irs tax forms 2012 1040a They also include raw materials and supplies that will physically become a part of merchandise intended for sale. Irs tax forms 2012 1040a Inventories are explained in Publication 538. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a For more information, see Publication 538. Irs tax forms 2012 1040a You must use the same accounting method to figure your taxable income and to keep your books. Irs tax forms 2012 1040a Also, you must use an accounting method that clearly shows your income. Irs tax forms 2012 1040a In general, any accounting method that consistently uses accounting principles suitable for your trade or business clearly shows income. Irs tax forms 2012 1040a An accounting method clearly shows income only if it treats all items of gross income and expense the same from year to year. Irs tax forms 2012 1040a More than one business. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a You must keep a complete and separate set of books and records for each business. Irs tax forms 2012 1040a Changing your method of accounting. Irs tax forms 2012 1040a   Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a For examples of changes that require approval and information on how to get approval for the change, see Publication 538. Irs tax forms 2012 1040a Business Taxes The form of business you operate determines what taxes you must pay and how you pay them. Irs tax forms 2012 1040a The following are the four general kinds of business taxes. Irs tax forms 2012 1040a Income tax. Irs tax forms 2012 1040a Self-employment tax. Irs tax forms 2012 1040a Employment taxes. Irs tax forms 2012 1040a Excise taxes. Irs tax forms 2012 1040a See Table 2 for the forms you file to report these taxes. Irs tax forms 2012 1040a You may want to get Publication 509. Irs tax forms 2012 1040a It has tax calendars that tell you when to file returns and make tax payments. Irs tax forms 2012 1040a Income Tax All businesses except partnerships must file an annual income tax return. Irs tax forms 2012 1040a Partnerships file an information return. Irs tax forms 2012 1040a Which form you use depends on how your business is organized. Irs tax forms 2012 1040a See Table 2 to find out which return you have to file. Irs tax forms 2012 1040a The federal income tax is a pay-as-you-go tax. Irs tax forms 2012 1040a You must pay the tax as you earn or receive income during the year. Irs tax forms 2012 1040a An employee usually has income tax withheld from his or her pay. Irs tax forms 2012 1040a If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Irs tax forms 2012 1040a If you are not required to make estimated tax payments, you may pay any tax due when you file your return. Irs tax forms 2012 1040a Table 2. Irs tax forms 2012 1040a Which Forms Must I File? IF you are a. Irs tax forms 2012 1040a . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a   THEN you may be liable for. Irs tax forms 2012 1040a . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a   Use Form. Irs tax forms 2012 1040a . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a 2 Various other schedules may be needed. Irs tax forms 2012 1040a Estimated tax. Irs tax forms 2012 1040a   Generally, you must pay taxes on income, including self-employment tax (discussed next), by making regular payments of estimated tax during the year. Irs tax forms 2012 1040a Sole proprietors, partners, and S corporation shareholders. Irs tax forms 2012 1040a   You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. Irs tax forms 2012 1040a Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. Irs tax forms 2012 1040a For more information, see Publication 505, Tax Withholding and Estimated Tax. Irs tax forms 2012 1040a Corporations. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a Use Form 1120-W, Estimated Tax for Corporations, to figure the estimated tax. Irs tax forms 2012 1040a You must deposit the payments as explained later under Depositing Taxes. Irs tax forms 2012 1040a For more information, see Publication 542. Irs tax forms 2012 1040a Self-Employment Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Irs tax forms 2012 1040a Your payments of SE tax contribute to your coverage under the social security system. Irs tax forms 2012 1040a Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. Irs tax forms 2012 1040a You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. Irs tax forms 2012 1040a Your net earnings from self-employment were $400 or more. Irs tax forms 2012 1040a You had church employee income of $108. Irs tax forms 2012 1040a 28 or more. Irs tax forms 2012 1040a Use Schedule SE (Form 1040) to figure your SE tax. Irs tax forms 2012 1040a For more information, see Publication 334, Tax Guide for Small Business. Irs tax forms 2012 1040a You can deduct a portion of your SE tax as an adjustment to income on your Form 1040. Irs tax forms 2012 1040a The Social Security Administration (SSA) time limit for posting self-employment income. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a The SSA will not change its records to increase your self-employment income. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Employment taxes include the following. Irs tax forms 2012 1040a Social security and Medicare taxes. Irs tax forms 2012 1040a Federal income tax withholding. Irs tax forms 2012 1040a Federal unemployment (FUTA) tax. Irs tax forms 2012 1040a If you have employees, you will need to get Publication 15, Circular E, Employer's Tax Guide. Irs tax forms 2012 1040a If you have agricultural employees, get Publication 51, Circular A, Agricultural Employer's Tax Guide. Irs tax forms 2012 1040a These publications explain your tax responsibilities as an employer. Irs tax forms 2012 1040a If you are not sure whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. Irs tax forms 2012 1040a That publication has information to help you determine whether an individual is an employee or an independent contractor. Irs tax forms 2012 1040a If you classify an employee as an independent contractor, you can be held liable for employment taxes for that worker plus a penalty. Irs tax forms 2012 1040a An independent contractor is someone who is self-employed. Irs tax forms 2012 1040a Generally, you do not have to withhold or pay any taxes on payments to an independent contractor. Irs tax forms 2012 1040a Federal Income, Social Security, and Medicare Taxes You generally must withhold federal income tax from your employee's wages. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Social security and Medicare taxes pay for benefits that workers and their families receive under the Federal Insurance Contributions Act (FICA). Irs tax forms 2012 1040a Social security tax pays for benefits under the old-age, survivors, and disability insurance part of FICA. Irs tax forms 2012 1040a Medicare tax pays for benefits under the hospital insurance part of FICA. Irs tax forms 2012 1040a You withhold part of these taxes from your employee's wages and you pay a part yourself. Irs tax forms 2012 1040a To find out how much social security and Medicare tax to withhold and to pay, see Publication 15. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a (Farm employers use Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. Irs tax forms 2012 1040a ) 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. Irs tax forms 2012 1040a You report and pay FUTA tax separately from social security and Medicare taxes and withheld income tax. Irs tax forms 2012 1040a You pay FUTA tax only from your own funds. Irs tax forms 2012 1040a Employees do not pay this tax or have it withheld from their pay. Irs tax forms 2012 1040a Which form do I file?   Report federal unemployment tax on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. Irs tax forms 2012 1040a See Publication 15 to find out if you can use this form. Irs tax forms 2012 1040a Hiring Employees Have the employees you hire fill out Form I-9 and Form W-4. Irs tax forms 2012 1040a Form I-9. Irs tax forms 2012 1040a   You must verify that each new employee is legally eligible to work in the United States. Irs tax forms 2012 1040a Both you and the employee must complete the U. Irs tax forms 2012 1040a S. Irs tax forms 2012 1040a Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. Irs tax forms 2012 1040a You can get the form from USCIS offices or from the USCIS website at www. Irs tax forms 2012 1040a uscis. Irs tax forms 2012 1040a gov. Irs tax forms 2012 1040a Call the USCIS at 1-800-375-5283 for more information about your responsibilities. Irs tax forms 2012 1040a Form W-4. Irs tax forms 2012 1040a   Each employee must fill out Form W-4, Employee's Withholding Allowance Certificate. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a For more information, see Publication 15. Irs tax forms 2012 1040a Employees claiming more than 10 withholding allowances. Irs tax forms 2012 1040a   An employer of an employee who claims more than 10 withholding allowances for wages paid can use several methods of withholding. Irs tax forms 2012 1040a See section 16 of Publication 15. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a You must also send copies to the Social Security Administration. Irs tax forms 2012 1040a See Information Returns, later, for more information on Form W-2. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Manufacture or sell certain products. Irs tax forms 2012 1040a Operate certain kinds of businesses. Irs tax forms 2012 1040a Use various kinds of equipment, facilities, or products. Irs tax forms 2012 1040a Receive payment for certain services. Irs tax forms 2012 1040a For more information on excise taxes, see Publication 510, Excise Taxes. Irs tax forms 2012 1040a Form 720. Irs tax forms 2012 1040a   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. Irs tax forms 2012 1040a Environmental taxes. Irs tax forms 2012 1040a Communications and air transportation taxes. Irs tax forms 2012 1040a Fuel taxes. Irs tax forms 2012 1040a Tax on the first retail sale of heavy trucks, trailers, and tractors. Irs tax forms 2012 1040a Manufacturers taxes on the sale or use of a variety of different articles. Irs tax forms 2012 1040a Form 2290. Irs tax forms 2012 1040a   There is a federal excise tax on certain trucks, truck tractors, and buses used on public highways. Irs tax forms 2012 1040a The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. Irs tax forms 2012 1040a Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. Irs tax forms 2012 1040a For more information, see the instructions for Form 2290. Irs tax forms 2012 1040a Form 730. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a Use Form 730, Monthly Tax Return for Wagers, to figure the tax on the wagers you receive. Irs tax forms 2012 1040a Form 11-C. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a Depositing Taxes You generally have to deposit employment taxes, certain excise taxes, corporate income tax, and S corporation taxes before you file your return. Irs tax forms 2012 1040a Generally, taxpayers are required to deposit taxes through the Electronic Federal Tax Payment System (EFTPS). Irs tax forms 2012 1040a Any business that has a federal tax obligation and requests a new EIN will automatically be enrolled in EFTPS. Irs tax forms 2012 1040a Through the mail, the business will receive an EFTPS PIN package that contains instructions for activating its EFTPS enrollment. Irs tax forms 2012 1040a Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a You must give a copy of each information return you are required to file to the recipient or payer. Irs tax forms 2012 1040a In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. Irs tax forms 2012 1040a For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. Irs tax forms 2012 1040a Form 1099-MISC. Irs tax forms 2012 1040a   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your trade or business. Irs tax forms 2012 1040a These payments include the following items. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Rent payments of $600 or more, other than rents paid to real estate agents. Irs tax forms 2012 1040a Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. Irs tax forms 2012 1040a Royalty payments of $10 or more. Irs tax forms 2012 1040a Payments to certain crew members by operators of fishing boats. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Form W-2. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a For more information on what to report on Form W-2, see the Instructions for Forms W-2 and W-3. Irs tax forms 2012 1040a Form 8300. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a Cash includes U. Irs tax forms 2012 1040a S. Irs tax forms 2012 1040a and foreign coin and currency. Irs tax forms 2012 1040a It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. Irs tax forms 2012 1040a For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). Irs tax forms 2012 1040a Penalties The law provides penalties for not filing returns or paying taxes as required. Irs tax forms 2012 1040a Criminal penalties may be imposed for willful failure to file, tax evasion, or making a false statement. Irs tax forms 2012 1040a Failure to file tax returns. Irs tax forms 2012 1040a   If you do not file your tax return by the due date, you may have to pay a penalty. Irs tax forms 2012 1040a The penalty is based on the tax not paid by the due date. Irs tax forms 2012 1040a See your tax return instructions for more information about this penalty. Irs tax forms 2012 1040a Failure to pay tax. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a For more information, see your tax return instructions. Irs tax forms 2012 1040a Failure to withhold, deposit, or pay taxes. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a You may also be subject to penalties if you deposit the taxes late. Irs tax forms 2012 1040a For more information, see Publication 15. Irs tax forms 2012 1040a Failure to follow information reporting requirements. Irs tax forms 2012 1040a   The following penalties apply if you are required to file information returns. Irs tax forms 2012 1040a For more information, see the General Instructions for Certain Information Returns. Irs tax forms 2012 1040a Failure to file information returns. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Failure to furnish correct payee statements. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Waiver of penalty. Irs tax forms 2012 1040a   These penalties will not apply if you can show that the failures were due to reasonable cause and not willful neglect. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a (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. Irs tax forms 2012 1040a ) Failure to supply taxpayer identification number. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Business Expenses You can deduct business expenses on your income tax return. Irs tax forms 2012 1040a These are the current operating costs of running your business. Irs tax forms 2012 1040a To be deductible, a business expense must be both ordinary and necessary. Irs tax forms 2012 1040a An ordinary expense is one that is common and accepted in your field of business, trade, or profession. Irs tax forms 2012 1040a A necessary expense is one that is helpful and appropriate for your business, trade, or profession. Irs tax forms 2012 1040a An expense does not have to be indispensable to be considered necessary. Irs tax forms 2012 1040a The following are brief explanations of some expenses that are of interest to people starting a business. Irs tax forms 2012 1040a There are many other expenses that you may be able to deduct. Irs tax forms 2012 1040a See your form instructions and Publication 535, Business Expenses. Irs tax forms 2012 1040a Business Start-Up Costs Business start-up costs are the expenses you incur before you actually begin business operations. Irs tax forms 2012 1040a Your business start-up costs will depend on the type of business you are starting. Irs tax forms 2012 1040a They may include costs for advertising, travel, surveys, and training. Irs tax forms 2012 1040a These costs are generally capital expenses. Irs tax forms 2012 1040a You usually recover costs for a particular asset (such as machinery or office equipment) through depreciation (discussed next). Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Irs tax forms 2012 1040a Any remaining cost must be amortized. Irs tax forms 2012 1040a For more information about amortizing start-up and organizational costs, see chapter 7 in Publication 535. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a You must spread the cost over more than one tax year and deduct part of it each year. Irs tax forms 2012 1040a This method of deducting the cost of business property is called depreciation. Irs tax forms 2012 1040a Business property you must depreciate includes the following items. Irs tax forms 2012 1040a Office furniture. Irs tax forms 2012 1040a Buildings. Irs tax forms 2012 1040a Machinery and equipment. Irs tax forms 2012 1040a You can choose to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. Irs tax forms 2012 1040a This deduction is known as the “section 179 deduction. Irs tax forms 2012 1040a ” For more information about depreciation and the section 179 deduction, see Publication 946, How To Depreciate Property. Irs tax forms 2012 1040a Depreciation must be taken in the year it is allowable. Irs tax forms 2012 1040a Allowable depreciation not taken in a prior year cannot be taken in the current year. Irs tax forms 2012 1040a If you do not deduct the correct depreciation, you may be able to make a correction by filing Form 1040X, Amended U. Irs tax forms 2012 1040a S. Irs tax forms 2012 1040a Individual Income Tax Return, or by changing your accounting method. Irs tax forms 2012 1040a For more information on how to correct depreciation deductions, see chapter 1 in Publication 946. Irs tax forms 2012 1040a Business Use of Your Home To deduct expenses related to the business use of part of your home, you must meet specific requirements. Irs tax forms 2012 1040a Even then, your deduction may be limited. Irs tax forms 2012 1040a To qualify to claim expenses for business use of your home, you must meet both the following tests. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Exclusive use. Irs tax forms 2012 1040a   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. Irs tax forms 2012 1040a The area used for business can be a room or other separately identifiable space. Irs tax forms 2012 1040a The space does not need to be marked off by a permanent partition. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a Exceptions to exclusive use. Irs tax forms 2012 1040a   You do not have to meet the exclusive use test if either of the following applies. Irs tax forms 2012 1040a You use part of your home for the storage of inventory or product samples. Irs tax forms 2012 1040a You use part of your home as a daycare facility. Irs tax forms 2012 1040a For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). Irs tax forms 2012 1040a Principal place of business. Irs tax forms 2012 1040a   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. Irs tax forms 2012 1040a You use it exclusively and regularly for administrative or management activities of your trade or business. Irs tax forms 2012 1040a You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a The relative importance of the activities performed at each location. Irs tax forms 2012 1040a If the relative importance factor does not determine your principal place of business, the time spent at each location. Irs tax forms 2012 1040a    If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. Irs tax forms 2012 1040a However, for other ways to qualify to deduct home office expenses, see Publication 587. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a If you file Schedule F (Form 1040) or you are a partner, you can use the worksheet in Publication 587. Irs tax forms 2012 1040a More information. Irs tax forms 2012 1040a   For more information about business use of your home, see Publication 587. Irs tax forms 2012 1040a Car and Truck Expenses If you use your car or truck in your business, you can deduct the costs of operating and maintaining it. Irs tax forms 2012 1040a You generally can deduct either your actual expenses or the standard mileage rate. Irs tax forms 2012 1040a Actual expenses. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a You can divide your expenses based on the miles driven for each purpose. Irs tax forms 2012 1040a Example. Irs tax forms 2012 1040a You are the sole proprietor of a flower shop. Irs tax forms 2012 1040a You drove your van 20,000 miles during the year. Irs tax forms 2012 1040a 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use. Irs tax forms 2012 1040a You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. Irs tax forms 2012 1040a Standard mileage rate. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a You can use the standard mileage rate for a vehicle you own or lease. Irs tax forms 2012 1040a The standard mileage rate is a specified amount of money you can deduct for each business mile you drive. Irs tax forms 2012 1040a It is announced annually by the IRS. Irs tax forms 2012 1040a To figure your deduction, multiply your business miles by the standard mileage rate for the year. Irs tax forms 2012 1040a    Generally, if you use the standard mileage rate, you cannot deduct your actual expenses. Irs tax forms 2012 1040a However, you may be able to deduct business-related parking fees, tolls, interest on your car loan, and certain state and local taxes. Irs tax forms 2012 1040a Choosing the standard mileage rate. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a In later years, you can choose to use either the standard mileage rate or actual expenses. Irs tax forms 2012 1040a   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). Irs tax forms 2012 1040a Additional information. Irs tax forms 2012 1040a   For more information about the rules for claiming car and truck expenses, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Irs tax forms 2012 1040a Recordkeeping This part explains why you must keep records, what kinds of records you must keep, and how to keep them. Irs tax forms 2012 1040a It also explains how long you must keep your records for federal tax purposes. Irs tax forms 2012 1040a A sample recordkeeping system is illustrated at the end of this part. Irs tax forms 2012 1040a Why Keep Records? Everyone in business must keep records. Irs tax forms 2012 1040a Good records will help you do the following. Irs tax forms 2012 1040a Monitor the progress of your business. Irs tax forms 2012 1040a   You need good records to monitor the progress of your business. Irs tax forms 2012 1040a Records can show whether your business is improving, which items are selling, or what changes you need to make. Irs tax forms 2012 1040a Good records can increase the likelihood of business success. Irs tax forms 2012 1040a Prepare your financial statements. Irs tax forms 2012 1040a   You need good records to prepare accurate financial statements. Irs tax forms 2012 1040a These include income (profit and loss) statements and balance sheets. Irs tax forms 2012 1040a These statements can help you in dealing with your bank or creditors and help you manage your business. Irs tax forms 2012 1040a An income statement shows the income and expenses of the business for a given period of time. Irs tax forms 2012 1040a A balance sheet shows the assets, liabilities, and your equity in the business on a given date. Irs tax forms 2012 1040a Identify source of receipts. Irs tax forms 2012 1040a   You will receive money or property from many sources. Irs tax forms 2012 1040a Your records can identify the source of your receipts. Irs tax forms 2012 1040a You need this information to separate business from nonbusiness receipts and taxable from nontaxable income. Irs tax forms 2012 1040a Keep track of deductible expenses. Irs tax forms 2012 1040a   You may forget expenses when you prepare your tax return unless you record them when they occur. Irs tax forms 2012 1040a Prepare your tax returns. Irs tax forms 2012 1040a   You need good records to prepare your tax returns. Irs tax forms 2012 1040a These records must support the income, expenses, and credits you report. Irs tax forms 2012 1040a Generally, these are the same records you use to monitor your business and prepare your financial statements. Irs tax forms 2012 1040a Support items reported on tax returns. Irs tax forms 2012 1040a   You must keep your business records available at all times for inspection by the IRS. Irs tax forms 2012 1040a If the IRS examines any of your tax returns, you may be asked to explain the items reported. Irs tax forms 2012 1040a A complete set of records will speed up the examination. Irs tax forms 2012 1040a Kinds of Records To Keep Except in a few cases, the law does not require any specific kind of records. Irs tax forms 2012 1040a You can choose any recordkeeping system suited to your business that clearly shows your income and expenses. Irs tax forms 2012 1040a The business you are in affects the type of records you need to keep for federal tax purposes. Irs tax forms 2012 1040a You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. Irs tax forms 2012 1040a See Accounting Method, earlier. Irs tax forms 2012 1040a If you are in more than one business, you should keep a complete and separate set of records for each business. Irs tax forms 2012 1040a A corporation should keep minutes of board of directors' meetings. Irs tax forms 2012 1040a Your recordkeeping system should include a summary of your business transactions. Irs tax forms 2012 1040a This summary is ordinarily made in your books (for example, accounting journals and ledgers). Irs tax forms 2012 1040a Your books must show your gross income, as well as your deductions and credits. Irs tax forms 2012 1040a For most small businesses, the business checkbook (discussed later) is the main source for entries in the business books. Irs tax forms 2012 1040a In addition, you must keep supporting documents, explained later. Irs tax forms 2012 1040a Electronic records. Irs tax forms 2012 1040a   All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a The electronic storage system must index, store, preserve, retrieve and reproduce the electronically stored books and records in legible format. Irs tax forms 2012 1040a All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. Irs tax forms 2012 1040a Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a You still have the responsibility of retaining any other books and records that are required to be retained. Irs tax forms 2012 1040a   The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. Irs tax forms 2012 1040a This test is not considered an examination and the results must be shared with you. Irs tax forms 2012 1040a If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a For details on electronic storage system requirements, see Revenue Procedure 97-22, available in Internal Revenue Bulletin 1997-13. Irs tax forms 2012 1040a Supporting Documents Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. Irs tax forms 2012 1040a Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks. Irs tax forms 2012 1040a These documents contain information you need to record in your books. Irs tax forms 2012 1040a It is important to keep these documents because they support the entries in your books and on your tax return. Irs tax forms 2012 1040a Keep them in an orderly fashion and in a safe place. Irs tax forms 2012 1040a For instance, organize them by year and type of income or expense. Irs tax forms 2012 1040a Gross receipts. Irs tax forms 2012 1040a   Gross receipts are the income you receive from your business. Irs tax forms 2012 1040a You should keep supporting documents that show the amounts and sources of your gross receipts. Irs tax forms 2012 1040a Documents that show gross receipts include the following. Irs tax forms 2012 1040a Cash register tapes. Irs tax forms 2012 1040a Bank deposit slips. Irs tax forms 2012 1040a Receipt books. Irs tax forms 2012 1040a Invoices. Irs tax forms 2012 1040a Credit card charge slips. Irs tax forms 2012 1040a Forms 1099-MISC. Irs tax forms 2012 1040a Purchases. Irs tax forms 2012 1040a   Purchases are the items you buy and resell to customers. Irs tax forms 2012 1040a If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into finished products. Irs tax forms 2012 1040a Your supporting documents should show the amount paid and that the amount was for purchases. Irs tax forms 2012 1040a Documents for purchases include the following. Irs tax forms 2012 1040a Canceled checks. Irs tax forms 2012 1040a Cash register tape receipts. Irs tax forms 2012 1040a Credit card sales slips. Irs tax forms 2012 1040a Invoices. Irs tax forms 2012 1040a These records will help you determine the value of your inventory at the end of the year. Irs tax forms 2012 1040a See Publication 538 for information on methods for valuing inventory. Irs tax forms 2012 1040a Expenses. Irs tax forms 2012 1040a   Expenses are the costs you incur (other than purchases) to carry on your business. Irs tax forms 2012 1040a Your supporting documents should show the amount paid and that the amount was for a business expense. Irs tax forms 2012 1040a Documents for expenses include the following. Irs tax forms 2012 1040a Canceled checks. Irs tax forms 2012 1040a Cash register tapes. Irs tax forms 2012 1040a Account statements. Irs tax forms 2012 1040a Credit card sales slips. Irs tax forms 2012 1040a Invoices. Irs tax forms 2012 1040a Petty cash slips for small cash payments. Irs tax forms 2012 1040a    A petty cash fund allows you to make small payments without having to write checks for small amounts. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Travel, transportation, entertainment, and gift expenses. Irs tax forms 2012 1040a   Specific recordkeeping rules apply to these expenses. Irs tax forms 2012 1040a For more information, see Publication 463. Irs tax forms 2012 1040a Employment taxes. Irs tax forms 2012 1040a   There are specific employment tax records you must keep. Irs tax forms 2012 1040a For a list, see Publication 15. Irs tax forms 2012 1040a Assets. Irs tax forms 2012 1040a   Assets are the property, such as machinery and furniture you own and use in your business. Irs tax forms 2012 1040a You must keep records to verify certain information about your business assets. Irs tax forms 2012 1040a You need records to figure the annual depreciation and the gain or loss when you sell the assets. Irs tax forms 2012 1040a Your records should show the following information. Irs tax forms 2012 1040a When and how you acquired the asset. Irs tax forms 2012 1040a Purchase price. Irs tax forms 2012 1040a Cost of any improvements. Irs tax forms 2012 1040a Section 179 deduction taken. Irs tax forms 2012 1040a Deductions taken for depreciation. Irs tax forms 2012 1040a Deductions taken for casualty losses, such as losses resulting from fires or storms. Irs tax forms 2012 1040a How you used the asset. Irs tax forms 2012 1040a When and how you disposed of the asset. Irs tax forms 2012 1040a Selling price. Irs tax forms 2012 1040a Expenses of sale. Irs tax forms 2012 1040a   The following documents may show this information. Irs tax forms 2012 1040a Purchase and sales invoices. Irs tax forms 2012 1040a Real estate closing statements. Irs tax forms 2012 1040a Canceled checks. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a These include account statements prepared for the financial institution by a third party. Irs tax forms 2012 1040a These account statements must be highly legible. Irs tax forms 2012 1040a The following table lists acceptable account statements. Irs tax forms 2012 1040a  IF payment is by. Irs tax forms 2012 1040a . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a THEN the statement must show the. Irs tax forms 2012 1040a . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a Check Check number. Irs tax forms 2012 1040a Amount. Irs tax forms 2012 1040a Payee's name. Irs tax forms 2012 1040a Date the check amount was posted to the account by the financial institution. Irs tax forms 2012 1040a Electronic funds transfer Amount transferred. Irs tax forms 2012 1040a Payee's name. Irs tax forms 2012 1040a Date the transfer was posted to the account by the financial institution. Irs tax forms 2012 1040a Credit card Amount charged. Irs tax forms 2012 1040a Payee's name. Irs tax forms 2012 1040a Transaction date. Irs tax forms 2012 1040a    Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. Irs tax forms 2012 1040a You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost. Irs tax forms 2012 1040a Recording Business Transactions A good recordkeeping system includes a summary of your business transactions. Irs tax forms 2012 1040a (Your business transactions are shown on the supporting documents just discussed. Irs tax forms 2012 1040a ) Business transactions are ordinarily summarized in books called journals and ledgers. Irs tax forms 2012 1040a You can buy them at your local stationery or office supply store. Irs tax forms 2012 1040a A journal is a book where you record each business transaction shown on your supporting documents. Irs tax forms 2012 1040a You may have to keep separate journals for transactions that occur frequently. Irs tax forms 2012 1040a A ledger is a book that contains the totals from all of your journals. Irs tax forms 2012 1040a It is organized into different accounts. Irs tax forms 2012 1040a Whether you keep journals and ledgers and how you keep them depends on the type of business you are in. Irs tax forms 2012 1040a For example, a recordkeeping system for a small business might include the following items. Irs tax forms 2012 1040a Business checkbook. Irs tax forms 2012 1040a Daily summary of cash receipts. Irs tax forms 2012 1040a Monthly summary of cash receipts. Irs tax forms 2012 1040a Check disbursements journal. Irs tax forms 2012 1040a Depreciation worksheet. Irs tax forms 2012 1040a Employee compensation record. Irs tax forms 2012 1040a The business checkbook is explained next. Irs tax forms 2012 1040a The other items are illustrated later under Sample Record System. Irs tax forms 2012 1040a The system you use to record business transactions will be more effective if you follow good recordkeeping practices. Irs tax forms 2012 1040a For example, record expenses when they occur, and identify the source of recorded receipts. Irs tax forms 2012 1040a Generally, it is best to record transactions on a daily basis. Irs tax forms 2012 1040a Business checkbook. Irs tax forms 2012 1040a   One of the first things you should do when you start a business is open a business checking account. Irs tax forms 2012 1040a You should keep your business account separate from your personal checking account. Irs tax forms 2012 1040a   The business checkbook is your basic source of information for recording your business expenses. Irs tax forms 2012 1040a You should deposit all daily receipts in your business checking account. Irs tax forms 2012 1040a You should check your account for errors by reconciling it. Irs tax forms 2012 1040a See Reconciling the checking account, later. Irs tax forms 2012 1040a   Consider using a checkbook that allows enough space to identify the source of deposits as business income, personal funds, or loans. Irs tax forms 2012 1040a You should also note on the deposit slip the source of the deposit and keep copies of all slips. Irs tax forms 2012 1040a   You should make all payments by check to document business expenses. Irs tax forms 2012 1040a Write checks payable to yourself only when making withdrawals from your business for personal use. Irs tax forms 2012 1040a Avoid writing checks payable to cash. Irs tax forms 2012 1040a If you must write a check for cash to pay a business expense, include the receipt for the cash payment in your records. Irs tax forms 2012 1040a If you cannot get a receipt for a cash payment, you should make an adequate explanation in your records at the time of payment. Irs tax forms 2012 1040a    Use the business account for business purposes only. Irs tax forms 2012 1040a Indicate the source of deposits and the type of expense in the checkbook. Irs tax forms 2012 1040a Reconciling the checking account. Irs tax forms 2012 1040a   When you receive your bank statement, make sure the statement, your checkbook, and your books agree. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a    You should reconcile your checking account each month. Irs tax forms 2012 1040a     Before you reconcile your monthly bank statement, check your own figures. Irs tax forms 2012 1040a Begin with the balance shown in your checkbook at the end of the previous month. Irs tax forms 2012 1040a To this balance, add the total cash deposited during the month and subtract the total cash disbursements. Irs tax forms 2012 1040a   After checking your figures, the result should agree with your checkbook balance at the end of the month. Irs tax forms 2012 1040a If the result does not agree, you may have made an error in recording a check or deposit. Irs tax forms 2012 1040a You can find the error by doing the following. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Adding the deposit amounts in your checkbook. Irs tax forms 2012 1040a Compare that total with the monthly total in your cash receipt book, if you have one. Irs tax forms 2012 1040a If the totals do not agree, check the individual amounts to find any errors. Irs tax forms 2012 1040a   If your checkbook and journal entries still disagree, then refigure the running balance in your checkbook to make sure additions and subtractions are correct. Irs tax forms 2012 1040a   When your checkbook balance agrees with the balance figured from the journal entries, you may begin reconciling your checkbook with the bank statement. Irs tax forms 2012 1040a Many banks print a reconciliation worksheet on the back of the statement. Irs tax forms 2012 1040a   To reconcile your account, follow these steps. Irs tax forms 2012 1040a Compare the deposits listed on the bank statement with the deposits shown in your checkbook. Irs tax forms 2012 1040a Note all differences in the dollar amounts. Irs tax forms 2012 1040a Compare each canceled check, including both check number and dollar amount, with the entry in your checkbook. Irs tax forms 2012 1040a Note all differences in the dollar amounts. Irs tax forms 2012 1040a Mark the check number in the checkbook as having cleared the bank. Irs tax forms 2012 1040a After accounting for all checks returned by the bank, those not marked in your checkbook are your outstanding checks. Irs tax forms 2012 1040a Prepare a bank reconciliation. Irs tax forms 2012 1040a One is illustrated later under Sample Record System. Irs tax forms 2012 1040a Update your checkbook and journals for items shown on the reconciliation as not recorded (such as service charges) or recorded incorrectly. Irs tax forms 2012 1040a At this point, the adjusted bank statement balance should equal your adjusted checkbook balance. Irs tax forms 2012 1040a If you still have differences, check the previous steps to find the errors. Irs tax forms 2012 1040a   Table 3. Irs tax forms 2012 1040a Period of Limitations IF you. Irs tax forms 2012 1040a . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a   THEN the period is. Irs tax forms 2012 1040a . Irs tax forms 2012 1040a . Irs tax forms 2012 1040a 1. Irs tax forms 2012 1040a Owe additional tax and situations (2), (3), and (4), below, do not apply to you   3 years 2. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a File a fraudulent return   Not limited 4. Irs tax forms 2012 1040a Do not file a return   Not limited 5. Irs tax forms 2012 1040a File a claim for credit or refund after you filed your return   Later of: 3 years or  2 years after tax   was paid 6. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a The single-entry system of bookkeeping is the simplest to maintain, but it may not be suitable for everyone. Irs tax forms 2012 1040a You may find the double-entry system better because it has built-in checks and balances to assure accuracy and control. Irs tax forms 2012 1040a Single-entry. Irs tax forms 2012 1040a   A single-entry system is based on the income statement (profit or loss statement). Irs tax forms 2012 1040a It can be a simple and practical system if you are starting a small business. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Double-entry. Irs tax forms 2012 1040a   A double-entry bookkeeping system uses journals and ledgers. Irs tax forms 2012 1040a Transactions are first entered in a journal and then posted to ledger accounts. Irs tax forms 2012 1040a These accounts show income, expenses, assets (property a business owns), liabilities (debts of a business), and net worth (excess of assets over liabilities). Irs tax forms 2012 1040a You close income and expense accounts at the end of each tax year. Irs tax forms 2012 1040a You keep asset, liability, and net worth accounts open on a permanent basis. Irs tax forms 2012 1040a   In the double-entry system, each account has a left side for debits and a right side for credits. Irs tax forms 2012 1040a It is self-balancing because you record every transaction as a debit entry in one account and as a credit entry in another. Irs tax forms 2012 1040a   Under this system, the total debits must equal the total credits after you post the journal entries to the ledger accounts. Irs tax forms 2012 1040a If the amounts do not balance, you have made an error and you must find and correct it. Irs tax forms 2012 1040a   An example of a journal entry exhibiting a payment of rent in October is shown next. Irs tax forms 2012 1040a General Journal Date Description of Entry Debit  Credit Oct. Irs tax forms 2012 1040a 5 Rent expense 780. Irs tax forms 2012 1040a 00     Cash   780. Irs tax forms 2012 1040a 00                 Computerized System There are computer software packages you can use for recordkeeping. Irs tax forms 2012 1040a They can be purchased in many retail stores. Irs tax forms 2012 1040a These packages are very helpful and relatively easy to use; they require very little knowledge of bookkeeping and accounting. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a To meet this qualification, the machine-sensible records must reconcile with your books and return. Irs tax forms 2012 1040a These records must provide enough detail to identify the underlying source documents. Irs tax forms 2012 1040a You must also keep all machine-sensible records and a complete description of the computerized portion of your recordkeeping system. Irs tax forms 2012 1040a This documentation must be sufficiently detailed to show all of the following items. Irs tax forms 2012 1040a Functions being performed as the data flows through the system. Irs tax forms 2012 1040a Controls used to ensure accurate and reliable processing. Irs tax forms 2012 1040a Controls used to prevent the unauthorized addition, alteration, or deletion of retained records. Irs tax forms 2012 1040a Charts of accounts and detailed account descriptions. Irs tax forms 2012 1040a See Revenue Procedure 98-25 in Cumulative Bulletin 1998-1 for more information. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Table 3 contains the periods of limitations that apply to income tax returns. Irs tax forms 2012 1040a Unless otherwise stated, the years refer to the period after the return was filed. Irs tax forms 2012 1040a Returns filed before the due date are treated as filed on the due date. Irs tax forms 2012 1040a Keep copies of your filed tax returns. Irs tax forms 2012 1040a They help in preparing future tax returns and making computations if you file an amended return. Irs tax forms 2012 1040a Employment taxes. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a For more information about recordkeeping for employment taxes, see Publication 15. Irs tax forms 2012 1040a Assets. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Records for nontax purposes. Irs tax forms 2012 1040a   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. Irs tax forms 2012 1040a For example, your insurance company or creditors may require you to keep them longer than the IRS does. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Henry uses part-time help, has no inventory of items held for sale, and uses the cash method of accounting. Irs tax forms 2012 1040a These sample records should not be viewed as a recommendation of how to keep your records. Irs tax forms 2012 1040a They are intended only to show how one business keeps its records. Irs tax forms 2012 1040a 1. Irs tax forms 2012 1040a Daily Summary of Cash Receipts This summary is a record of cash sales for the day. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a Henry takes the cash sales entry from his cash register tape. Irs tax forms 2012 1040a If he had no cash register, he would simply total his cash sale slips and any other cash received that day. Irs tax forms 2012 1040a He carries the total receipts shown in this summary for January 3 ($267. Irs tax forms 2012 1040a 80), including cash sales ($263. Irs tax forms 2012 1040a 60) and sales tax ($4. Irs tax forms 2012 1040a 20), to the Monthly Summary of Cash Receipts. Irs tax forms 2012 1040a Petty cash fund. Irs tax forms 2012 1040a   Henry uses a petty cash fund to make small payments without having to write checks for small amounts. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a He sets up a fixed amount ($50) in his petty cash fund. Irs tax forms 2012 1040a The total of the unspent petty cash and the amounts on the petty cash slips should equal the fixed amount of the fund. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a (See the Check Disbursements Journal entry for check number 92. Irs tax forms 2012 1040a ) This restores the fund to its fixed amount of $50. Irs tax forms 2012 1040a He then summarizes the slips and enters them in the proper columns in the monthly check disbursements journal. Irs tax forms 2012 1040a 2. Irs tax forms 2012 1040a Monthly Summary of Cash Receipts This shows the income activity for the month. Irs tax forms 2012 1040a Henry carries the total monthly net sales shown in this summary for January ($4,865. Irs tax forms 2012 1040a 05) to his Annual Summary. Irs tax forms 2012 1040a 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. Irs tax forms 2012 1040a He cannot take a deduction for sales tax turned over to the state because he only collected the tax. Irs tax forms 2012 1040a He does not include the tax in his income. Irs tax forms 2012 1040a 3. Irs tax forms 2012 1040a Check Disbursements Journal Henry enters checks drawn on the business checking account in the Check Disbursements Journal each day. Irs tax forms 2012 1040a All checks are prenumbered and each check number is listed and accounted for in the column provided in the journal. Irs tax forms 2012 1040a Frequent expenses have their own headings across the sheet. Irs tax forms 2012 1040a He enters in a separate column expenses that require comparatively numerous or large payments each month, such as materials, gross payroll, and rent. Irs tax forms 2012 1040a Under the General Accounts column, he enters small expenses that normally have only one or two monthly payments, such as licenses and postage. Irs tax forms 2012 1040a Henry does not pay personal or nonbusiness expenses by checks drawn on the business account. Irs tax forms 2012 1040a If he did, he would record them in the journal, even though he could not deduct them as business expenses. Irs tax forms 2012 1040a Henry carries the January total of expenses for materials ($1,083. Irs tax forms 2012 1040a 50) to the Annual Summary. Irs tax forms 2012 1040a Similarly, he enters the monthly total of expenses for telephone, truck/auto, etc. Irs tax forms 2012 1040a , in the appropriate columns of that summary. Irs tax forms 2012 1040a 4. Irs tax forms 2012 1040a Employee Compensation Record This record shows the following information. Irs tax forms 2012 1040a The number of hours Henry's employee worked in a pay period. Irs tax forms 2012 1040a The employee's total pay for the period. Irs tax forms 2012 1040a The deductions Henry withheld in figuring the employee's net pay. Irs tax forms 2012 1040a The monthly gross payroll. Irs tax forms 2012 1040a Henry carries the January gross payroll ($520) to the Annual Summary. Irs tax forms 2012 1040a 5. Irs tax forms 2012 1040a Annual Summary This annual summary of monthly cash receipts and expense totals provides the final amounts to enter on Henry's tax return. Irs tax forms 2012 1040a He figures the cash receipts total from the total of monthly cash receipts shown in the Monthly Summary of Cash Receipts. Irs tax forms 2012 1040a He figures the expense totals from the totals of monthly expense items shown in the Check Disbursements Journal. Irs tax forms 2012 1040a As in the journal, he keeps each major expense in a separate column. Irs tax forms 2012 1040a Henry carries the cash receipts total shown in the annual summary ($47,440. Irs tax forms 2012 1040a 9