Saturday, June 12, 2010

Save it or shred it? Some recordkeeping tips


Once you've filed your 2009 tax return, you may wonder
which records you should keep and which ones you can run
through the shredder. Here are a few suggestions.


If the IRS asks, you must be able to prove the validity of your tax return, which includes providing substantiation for each item reported on your tax return.

Here's a list of the most common records you need to keep.

* W2s, 1099s, and other records of income received.

* Receipts, cancelled checks, and other documentation
  for deductions taken.
* Written acknowledgments for charitable contributions.
* Records related to home improvements, sales, and
* Investment purchase and sales information, including
  brokerage statements.
* Records on IRAs and other retirement plans.

The IRS does not require that you keep your records in any particular way. The only requirement is that your records allow you and the IRS to determine your correct tax liability. So the key is to keep checks, receipts, and other records that document the income and deductions you've put on your tax return.

Wondering how long you need to keep these records? Keep tax records for as long as your return is subject to an IRS audit. Unless fraud, evasion, or a substantial understatement of income is involved, the IRS generally has only three years in which to question your return. Because of various combinations of the statute of limitations and technical provisions in the law, keep
records related to a specific tax return for seven years, rather than just for three years. If a record will affect future years, you may need to keep it even longer. And copies of tax returns should be kept permanently. 

For any assistance you need or questions you have about
recordkeeping, contact our office.

Tuesday, January 12, 2010

What's the status of health care reform?

While many of us were wrapping Christmas gifts or planning holiday gatherings this past Christmas Eve,

the Senate passed an $871 billion health care reform bill by a vote of 60 to 39. The "Patient Protection and

Affordable Care Act of 2009" would expand health insurance coverage to 94% of Americans and pay for it

with billions of dollars in new taxes and fees.


The House passed its version of health reform back in early November. Its bill, the "Affordable Health Care

for America Act," also extends coverage and pays for it with a different collection of taxes and fees from

those in the Senate bill. Both bills are massive and contain provisions that would affect individuals, businesses, and the medical

and insurance industries. A conference of members from

the House and Senate will be held in January to work

out the differences between the two bills and fashion

one piece of legislation. When that bill comes out of

conference, it must be passed by the House of

Representatives and the Senate before it can be sent to

the President to be signed into law.

Among the tax provisions in the Senate bill:

* A 40% excise tax on employer-provided health

insurance plans with annual premiums over $8,500 for

individuals and $23,000 for families. Somewhat higher

limit for retirees and those in high-risk professions


* A penalty excise tax on individuals who fail to

maintain health insurance coverage, starting at $95

in 2014 and increasing to $750 by 2016.

Among the tax provisions in the House bill:

* A 5.4% surtax on single taxpayers with incomes over

$500,000 and joint filers with incomes over $1 million.

* An additional tax levied on those who fail to obtain

health insurance coverage of either 2.5% of their

adjusted income or the average cost of insurance

premiums available on the new health care exchange.

Exemptions provided for lower-income individuals.

Both the Senate and the House bills provide individuals

and businesses with tax credits to help with the costs

of insurance. It's important to note that the provisions

in the final bill may differ significantly from those

in either of the current bills, so as you begin your tax

planning for 2010, remember that health reform and the

taxes connected with it are still a work in progress,

not a final law.

If you have any questions about this or any tax or accounting concerns don't ever hesitate to call our offices.