jump to navigation

Record Retention Guidelines…..Tax Tip of the Week | No. 143 April 25, 2012

Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , add a comment

“How Long Do I Keep This Stuff?”

Now that you have filed your tax returns you may be wondering how long to retain the returns and the source documents. The Ohio Society of CPAs offers these guidelines for tax records and other important documents:

Copies of Tax Returns – Seven years.  You have seven years to go back and make a claim for a “worthless security”.  You will also need the returns and supporting documentation in the case of an audit.  Most audits will be conducted within three – six years of the filing date.  Note:  In the event you generate a Net Operating Loss (NOL) tax return copies need to be kept for up to 20 years.  An NOL can be carried forward for up to 20 years.

Cancelled Checks – If the cancelled check relates to supporting your tax return, then it should be included in your tax file for the periods discussed above.  Otherwise, cancelled checks and bank statements should be kept for three years.  It is advised that self-employed individuals should retain these records for six years.

Year-end Mutual Funds and Brokerage Statements – Three years.  Unless the statements are needed longer in order to establish your cost basis in the investment.

Loan Documents – Shred them when you pay off the loan and receive the title or deed.

Big Ticket Items – A special insurance file should be established to hold receipts of items such as, jewelry, rugs, appliances, antiques, cars, collectibles, furniture etc.  These will be needed to support your insurance claim in the event of a loss or damage.

Major Home Improvements – Receipts of major home improvements should be kept for as long as you own your home.  They may be needed for warranty purposes and allows you to show potential buyers how much you have invested in your home.

Keep Forever Documents – The following documents will be needed throughout your life time:

– Retirement documents.  Including your IRA contribution records.
– Stock and mutual fund purchases should be kept of as long as you hold that investment.
– Life Insurance policies should be kept until the policy terms are fulfilled.  Make sure your heirs know where to find policies that pay at the time of your death!
– Defined benefit pension plan documents should be kept even after you retire.
– Wills, Powers of Attorney, trust documents and similar documents will be needed to administer your estate.  Again, make sure your heirs know where to find these documents!

Hopefully these guidelines let you know what clutter in your home can now be shredded. 

As always, give us a call if you have any questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

Tax Tip of the Week Video Series:

http://youtu.be/BlhqUiVEsJo

…until next week.

 

Another Successful Tax Season | Tax Tip of the Week | No. 142 April 18, 2012

Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , 2comments

The Week After Tax Season

Aaaah……The week after tax season (and the first full weekend home in two and half months) is the best week in a tax accountant’s life!

We met a lot of new clients this year because of referrals from existing clients, and readers of our Tax Tip of the Week.  Thank you!  A referral is the best compliment we can ever receive.

Even though tax season is over—we will continue our Tax Tip of the Week mailing for the rest of the year.  We will keep you updated on the constant changes as well as spotlighting specific tax planning ideas.

If there are any special tax topics you would like us to cover, just send us an email or give us a call.

Again, thank you for making this one of most rewarding tax seasons yet.

As always, give us a call if you have any questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

Tax Tip of the Week Video Series:

http://youtu.be/BlhqUiVEsJo

…until next week.

 

Submit Extension Form 4868 | Tax Tip of the Week | No. 141 April 11, 2012

Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , add a comment

It is “OK” to File an Extension

If you haven’t filed your tax return by now, you should probably consider filing for an extension.  It is a lot easier to file for an extension than it is to amend a return later for a mistake you made trying to rush your return to completion.  Even more costly is if the IRS finds a mistake you made and assesses underpayment penalties and interest.

To file for an extension, you simply need to submit Form 4868.   After submitting this form, you now have until October 15, 2012 to timely file your return.  Note, however, an extension of time to file is not an extension of time to pay.  If you suspect you will owe some taxes, you must send a payment along with the extension.  This is true for your federal, state, school district and city returns.

Ohio will automatically accept the federal extension.  Some cities, however, require a special city extension form.  Also, some cities will not allow extensions if you only have W2 income.  Be sure to check with your work and/or resident cities before April 17th.

Another reason to file for extension is that some speculate your chances for an audit decreases for extended returns.  How?  One of the methods the IRS uses to select a return for audit is to select a random sample of returns filed by April 17th.   If your return is not in that sample—then you don’t get picked!

Editor’s Note: One of the pledges I make to all my clients is that my personal return will be the last one filed each year. When my most procrastinating client’s return is filed on October 15th —-mine is right behind it!  And has been that way for nearly 20 years!

As always, give us a call if you have any questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW 

…until next week. Tax Tip of the Week Video Series:

http://youtu.be/BlhqUiVEsJo

…until next week.

 

Federal vs. Ohio Tax Rules | Tax Tip of the Week | No. 140 April 4, 2012

Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , add a comment

What Makes Ohio Different?

Generally speaking, the Ohio tax laws follow federal rules.  There are, however, several important differences you should know about.  This week, we will look at several of those differences. 

– Gambling Income:  On the federal return, if you itemize deductions, you can deduct gambling losses to the extent of gambling income.  On the Ohio return, there is no place to deduct gambling losses.  (Note:  if you pay taxes on gambling income to another state, make sure you file a non-resident return with that state so you don’t pay taxes on that income a second time to Ohio.  You will receive a credit for taxes paid to another state).   

– Social Security:  Depending on your income, as much as 85% of your Social Security income may be included in your federal taxable income.  In Ohio, any federal taxable Social Security income is not included in your Ohio taxable income. 

– United States Treasury Interest:  Interest, for example, from US Savings Bonds is fully taxable on your federal tax return.  That interest, however, is not included in your Ohio tax return. 

– Municipal Bond Interest:  In most cases, interest earned on tax-free municipal bonds is not taxable on the federal tax return.  However, it depends which state issued the municipal bonds whether or not the interest is taxed in Ohio.  If the bonds were issued in Ohio, it is not taxable.  If the bond was issued by a different state that interest income would be taxable. 

– Military Retirement Income:  Any retirement income you receive from serving as active duty military or in the reserves is generally taxable federal income.  A few years ago, Ohio now allows you to exclude that income on the state return.  (Note:  If you retired, for example, with 15 years of military service and 45 years of combined military and civilian service- a portion of the pension may qualify for exclusion on the Ohio return.  Call us if this applies to anyone you know).

 – Unsubsidized Health Insurance and Long-term Care Insurance (LTC) Premiums:  On the federal return, these insurance premiums are only deductible if they (and all other medical expenses) exceed 7.5% of your AGI.  Furthermore, the amount of deductible LTC premiums is determined by your age.  Ohio allows a full deduction of all unsubsidized health insurance and 100% of LTC premiums paid on the state return. 

– Political Contributions:  Amounts donated for political purposes are never deductible on the federal return.  Ohio does allow up to a $50 tax credit for donations made to candidates running for any state-wide office. 

These are just a few of the tax rules that make our state so special! 

Give us a call to discuss your state questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

Tax Tip of the Week Video Series:

http://youtu.be/BlhqUiVEsJo

…until next week.