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If April 15 brings with it a desire to stick your head in the sand, ostrich-style, here are five recommendations to make settling your annual bill with Uncle Sam easier.
1. Keep good records all year long.
If you are going to want to claim a deduction, you have to have a
receipt for it, says small-business tax expert Russell Fox, a
principal at Las Vegas, Nev.-based Clayton Financial and Tax and
the author of Tax Strategies for the Small Business
Owner: Reduce Your Taxes and Fatten Your Profits
(Apress Media LLC, 2013). Also, those receipts will be
your defense if you are ever audited by the Internal Revenue
Service.
2. Keep Social Security numbers under lock and
key.
"Identity theft is a huge epidemic the IRS is facing," says Fox.
This year, there has been a surge in scammers defrauding the
IRS by filing false refund claims using stolen Social
Security numbers, especially in Florida. Business owners have
to have the Social Security numbers of their employees, but
they should keep those files locked away in a filing cabinet
to avoid being the gateway for a scammer.
3. Enter your expenses in your accounting software
regularly.
Accounting software like Quicken is useful, but only as useful as
an entrepreneur is diligent about entering his or her financial
information throughout the year, says Fox.
Related: Entrepreneurs Could Benefit from New Research and Development Tax Credit
4. Bring all of your financial documents for your meeting
with your tax professional the first time.
Have all of your documents, such as a 1099 form, with you when
you visit your accountant, in addition to any other forms on a
checklist that may be provided by your tax professional. Make
sure your profit and loss statements are complete. If you have
any special concerns, email your accountant ahead of time, says
Fox.
Being prepared for your meeting with your accountant is especially critical this year. Fiscal cliff negotiations in Congress went right up to January, and those negotiations included several provisions that required the IRS to amend its ancient computer system. Accountants have been jammed up because the IRS hasn't been able to accept certain tax forms until about a week ago and some are still not being accepted. That's going to make the rush leading up to April 15 all the more severe, says Fox.
5. Have a backup for your files.
About five years ago, Fox's computer hard drive failed about two
weeks before April 15. Thankfully, he had a backup. To be sure it
works, try to actually restore a file from that backup.
Related: Calculating Your Home-Office Deduction Just Got Easier
What is your best tip for staying organized and keeping the calm during tax season? Leave a comment below and let us know.
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