Department of the Treasury

Internal Revenue Service Contents

Introduction .............................. 1

Publication 583 What New Business Owners Need To Know ..... 2

(Rev. May 2002) Forms of Business ......................... 2 Cat. No. 15150B

Identification Numbers ...................... 3

Employer Identification Number (EIN) ......... 3

Starting a Payee’s Identification Number .............. 4

Tax Year ................................. 4

Business and Accounting Method ........................ 4

Keeping Business Taxes ........................... 5

Income Tax ............................ 5

Self-Employment Tax ..................... 5

Records Employment Taxes ....................... 6

Excise Taxes ........................... 7

Depositing Taxes ........................ 8

Information Returns ........................ 8

Penalties ................................. 8

Business Expenses ........................ 9

Business Start-Up Costs ................... 9

Depreciation ............................ 9

Business Use of Your Home ................ 9

Car and Truck Expenses .................. 10

Recordkeeping ............................ 10

Why Keep Records? ...................... 10

Kinds of Records To Keep ................. 11

How Long To Keep Records ................ 14

Sample Record System ................... 15

How To Get More Information ................ 17

Index .................................... 26

Introduction

This publication provides basic federal tax information for

people who are starting a business. It also provides information on keeping records and illustrates a recordkeeping system.

Throughout this publication we refer to other IRS publications and forms where you will find more information. In

addition, you may want to contact other government agencies, such as the Small Business Administration (SBA).

See page 17 to find out how to get more information.

Comments and suggestions. We welcome your comments about this publication and your suggestions for

future editions.

You can e-mail us while visiting our web site at

www.irs.gov.

You can write to us at the following address:
The Small Business Administration (SBA) is a federal

Internal Revenue Service agency that can help you answer questions such as those

Technical Publications Branch listed above. For information on how to contact the SBA,

W:CAR:MP:FP:P see page 24.

1111 Constitution Ave. NW

Washington, DC 20224

We respond to many letters by telephone. Therefore, it Forms of Business

would be helpful if you would include your daytime phone The most common forms of business are the sole proprie- number, including the area code, in your correspondence. torship, partnership, and corporation. When beginning a

business, you must decide which form of business to use.

What New Business Owners Legal and tax considerations enter into this decision. Only

tax considerations are discussed in this publication.

Need To Know Your form of business determines which income

tax return form you have to file. See Table 2 on

As a new business owner, you need to know your federal page 6 to find out which form you have to file.

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tax responsibilities. Table 1, below, can help you learn

what those responsibilities are. Ask yourself each question

listed in the table, then see the related discussion to find Sole proprietorships. A sole proprietorship is an uninthe answer. corporated business that is owned by one individual. It is In addition to knowing about federal taxes, you need to the simplest form of business organization to start and make some basic business decisions. Ask yourself: maintain. The business has no existence apart from you,

• What are my financial resources? the owner. Its liabilities are your personal liabilities and you

undertake the risks of the business for all assets owned, • What products and services will I sell? whether or not used in the business. You include the

• How will I market my products and services? income and expenses of the business on your own tax

return. • How will I develop a strategic business plan?

More information. For more information on sole propri- • How will I manage my business on a day-to-day etorships, see Publication 334, Tax Guide for Small Busi- basis? ness. But if you are a farmer, see Publication 225,

• How will I recruit employees? Farmer’s Tax Guide.

Table 1. What New Business Owners Need To Know About Federal Taxes

(Note: This table is intended to help you, as a new business owner, learn what you need to know about

your federal tax responsibilities. To use it, ask yourself each question in the left column, then see the related

discussion on the page shown in the right column.)

What Must I Know? Where To Find the Answer

Which form of business will I use? See Forms of Business above.

Will I need an employer identification number (EIN)? See Identification Numbers on page 3.

Do I have to start my tax year in January? Or may I start See Tax Year on page 4.

it in any other month?

What method can I use to account for my income and See Accounting Method on page 4.

expenses?

What kinds of federal taxes will I have to pay? How See Business Taxes on page 5.

should I pay my taxes?

What must I do if I have employees? See Employment Taxes on page 6.

What forms must I file? See Table 2 on page 6 and Information Returns on

page 8.

Are there penalties if I do not pay my taxes or file my See Penalties on page 8.

returns?

What business expenses can I deduct on my federal See Business Expenses on page 9.

income tax return?

What records must I keep? How long must I keep them? See Recordkeeping on page 10.

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Partnerships. A partnership is the relationship existing • An SSN is issued to individuals by the Social Secur- between two or more persons who join to carry on a trade ity Administration (SSA) and is in the following for- or business. Each person contributes money, property, mat: 000–00–0000. labor, or skill, and expects to share in the profits and losses

of the business. • An EIN is issued to individuals (sole proprietors),

A partnership must file an annual information return to partnerships, corporations, and other entities by the

report the income, deductions, gains, losses, etc., from its IRS and is in the following format: 00–0000000.

operations, but it does not pay income tax. Instead, it

“passes through” any profits or losses to its partners. Each You must include your taxpayer identification number

partner includes his or her share of the partnership’s items (SSN or EIN) on all returns and other documents you send

on his or her tax return. to the IRS. You must also furnish your number to other

persons who use your identification number on any returns More information. For more information on partner- or documents they send to the IRS. This includes returns ships, see Publication 541, Partnerships. or documents filed to report the following information.

Corporations. In forming a corporation, prospective 1) Interest, dividends, royalties, etc., paid to you. shareholders transfer money, property, or both, for the

corporation’s capital stock. A corporation generally takes 2) Any amount paid to you as a dependent care prothe same deductions as a sole proprietorship to figure its vider.

taxable income. A corporation can also take special deduc- 3) Certain other amounts paid to you that total $600 or tions. more for the year. The profit of a corporation is taxed to the corporation

when earned, and then is taxed to the shareholders when If you do not furnish your identification number as redistributed as dividends. However, shareholders cannot quired, you may be subject to penalties. See Penalties,

deduct any loss of the corporation. later.

More information. For more information on corpora- Employer Identification Number (EIN) tions, see Publication 542, Corporations.

EINs are used to identify the tax accounts of employers, S corporations. An eligible domestic corporation can certain sole proprietors, corporations, partnerships, es- avoid double taxation (once to the corporation and again to tates, trusts, and other entities. the shareholders) by electing to be treated as an S corpo- If you don’t already have an EIN, you need to get one if ration. An S corporation generally is exempt from federal

you: income tax other than tax on certain capital gains and

passive income. Its shareholders include on their tax returns their share of the corporation’s separately stated 1) Have employees,

items of income, deduction, loss, and credit, and their 2) Have a qualified retirement plan, share of nonseparately stated income or loss.

3) Operate your business as a corporation or partner- More information. For more information on S corpora- ship, or tions, see the instructions for Form 2553, Election by a

Small Business Corporation, and Form 1120S, U.S. In- 4) File returns for:

come Tax Return for an S Corporation. a) Employment taxes,

Limited liability company. A limited liability company b) Excise taxes, or

(LLC) is an entity formed under state law by filing articles of c) Alcohol, tobacco, or firearms taxes. organization as an LLC. None of the members of an LLC

are personally liable for its debts. An LLC may be classified

for federal income tax purposes as either a partnership, a

corporation, or an entity disregarded as an entity separate How to get an EIN. You can get an EIN by mail, telephone, or fax. But first you must fill out Form SS–4, from its owner by applying the rules in regulations section

301.7701–3. See the instructions for Form 8832, Entity Application for Employer Identification Number. You can

Classification Election, get Form SS–4 at SSA offices or by calling the IRS at for more details.

1–800–829–3676. It is also available from the IRS web

site at www.irs.gov.

Identification Numbers When to apply. You should apply for an EIN early

enough to receive the number by the time you must file a

You must have a taxpayer identification number so the IRS return or statement or make a tax deposit. If you apply by

can process your returns. The two most common kinds of mail, file Form SS–4 at least 4 to 5 weeks before you need

taxpayer identification numbers are the social security an EIN. If you apply by telephone, you can get an EIN

number (SSN) and the employer identification number immediately. If you apply by fax, you can get an EIN within

(EIN). 4 business days.

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If you do not receive your EIN by the time a return is due, 1) Calendar tax year. This is a period of 12 consecu- file your return anyway. Write “Applied for” and the date

tive months beginning January 1 and ending Decem- you applied for the number in the space for the EIN. ber 31.

More than one EIN. You should have only one EIN. If you 2) Fiscal tax year. This is a period of 12 consecutive have more than one EIN and are not sure which to use, months ending on the last day of any month except contact the Internal Revenue Service Center where you file December. A 52- or 53-week period is a fiscal year your return. Give the numbers you have, the name and ending on a specific day of the week that occurs in a address to which each was assigned, and the address of particular month or occurs nearest to the last day of your main place of business. The IRS will tell you which a specific month. number to use.

If you operate a business as a sole proprietor, the tax

More information. For more information about EINs, see year for your business must be the same as your individual

Publication 1635, Understanding Your EIN. tax year. Special rules apply to S corporations and partnerships.

Payee For more information, see Publication 538, Accounting ’s Identification Number

Periods and Methods.

In the operation of a business, you will probably make

certain payments you must report on information returns First-time filer. If you have never filed an income tax

return, you can choose either a calendar tax year or a fiscal (discussed later under Information Returns). The forms

used to report these payments must include the payee tax year. You must choose a tax year by the due date, not ’s

including extensions, for filing your first return. identification number.

You must use a calendar tax year if you have inadeEmployee. If you have employees, you must get an SSN quate records or you have no annual accounting period, or

from each of them. Record the name and SSN of each your annual accounting period does not qualify as a fiscal

employee exactly as they are shown on the employee’s year.

social security card. If the employee’s name is not correct

as shown on the card, the employee should request a new Changing your tax year. Once you have chosen your tax

card from the SSA. This may occur, for example, if the year, you may have to get IRS approval to change it. To get

employee’s name has changed due to marriage or divorce. approval, you must file Form 1128, Application To Adopt,

If your employee does not have an SSN, he or she Change, or Retain a Tax Year. You may have to pay a fee.

should file Form SS–5, Application for a Social Security For more information, see Publication 538.

Card, with the SSA. This form is available at SSA offices or

by calling 1–800–772–1213. It is also available from the

SSA web site at www.ssa.gov. Accounting Method

Other payee. If you make payments to someone who is An accounting method is a set of rules used to determine not your employee and you must report the payments on when and how income and expenses are reported. You an information return, get that person’s SSN. If you make choose an accounting method for your business when you reportable payments to an organization, such as a corpo- file your first income tax return. There are two basic ac- ration or partnership, you must get its EIN. counting methods. To get the payee’s SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. 1) Cash method. Under the cash method, you report This form is available from IRS offices or by calling income in the tax year you receive it. You usually 1–800–829–3676. It is also available from the IRS web deduct or capitalize expenses in the tax year you pay site at www.irs.gov. them.

If the payee does not provide you with an identifi- 2) Accrual method. Under an accrual method, you cation number, you may have to withhold part of generally report income in the tax year you earn it, the payments as backup withholding. For infor- CAUTION

!

even though you may receive payment in a later mation on backup withholding, see the Form W–9 instruc- year. You deduct or capitalize expenses in the tax tions and the General Instructions for Forms 1099, 1098, year you incur them, whether or not you pay them 5498, and W–2G. that year.

For other methods, see Publication 538.

If you need inventories to show income correctly, you Tax Year must generally use an accrual method of accounting for

purchases and sales. Inventories include goods held for

You must figure your taxable income and file an income tax sale in the normal course of business. They also include

return based on an annual accounting period called a tax raw materials and supplies that will physically become a

year. A tax year is usually 12 consecutive months. There part of merchandise intended for sale. Inventories are

are two kinds of tax years. explained in Publication 538.

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Certain small business taxpayers can adopt or ing, or do not pay enough tax that way, you might have to

change to the cash method of accounting and can pay estimated tax. If you are not required to make estichoose to not account for inventories. For more mated tax payments, you may pay any tax due when you

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information, see Publication 538. file your return.

You must use the same accounting method to figure

your taxable income and to keep your books. Also, you Estimated tax. Generally, you must pay taxes on income,

must use an accounting method that clearly shows your including self-employment tax (discussed next), by making

income. In general, any accounting method that consist- regular payments of estimated tax during the year.

ently uses accounting principles suitable for your trade or Sole proprietors, partners, and S corporation share- business clearly shows income. An accounting method holders. You generally have to make estimated tax pay- clearly shows income only if it treats all items of gross ments if you expect to owe tax of $1,000 or more when you income and expense the same from year to year. file your return. Use Form 1040–ES, Estimated Tax for

Individuals, to figure and pay your estimated tax. For more More than one business. When you own more than one information, see Publication 505, Tax Withholding and business, you can use a different accounting method for Estimated Tax. each business if the method you use for each clearly

shows your income. You must keep a complete and sepa- Corporations. You generally have to make estimated

rate set of books and records for each business. tax payments for your corporation if you expect it to owe

tax of $500 or more when you file its return. Use Form

1120–W, Estimated Tax for Corporations, to figure the Changing your method of accounting. Once you have estimated tax. You must deposit the payments as ex- set up your accounting method, you must get IRS approval plained on page 8 under Depositing Taxes. For more before you can change to another method. A change in information, see Publication 542. accounting method not only includes a change in your

overall system of accounting, but also a change in the

treatment of any material item. For examples of changes Self-Employment Tax

that require approval and information on how to get approval for the change, see Publication 538. Self-employment tax is a social security and Medicare tax

primarily for individuals who work for themselves. Your

payments of self-employment tax contribute to your coverage under the social security system. Social security cov- Business Taxes erage provides you with retirement benefits, disability

benefits, survivor benefits, and hospital insurance (Medi- The form of business you operate determines what taxes care) benefits. you must pay and how you pay them. The following are the You must pay self-employment tax if either of the follow- four general kinds of business taxes.

ing applies.

• Income tax.

1) Your net earnings from self-employment (excluding • Self-employment tax. church employee income) were $400 or more. • Employment taxes. 2) You had church employee income of $108.28 or • Excise taxes. more.

Use Schedule SE (Form 1040) to figure your self-employ- See Table 2 on page 6 for the forms you file to report ment tax. For more information, see Publication 533, these taxes.

Self-Employment Tax. You may want to get Publication 509. It has tax You can deduct one-half of your self-employment calendars that tell you when to file returns and

make tax payments. tax as an adjustment to income on your Form

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1040.

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Income Tax

The Social Security Administration (SSA) time limit for

All businesses except partnerships must file an annual posting self-employment income. Generally, the SSA

income tax return. Partnerships file an information return. will give you credit only for self-employment income reWhich form you use depends on how your business is ported on a tax return filed within 3 years, 3 months, and 15

organized. See Table 2 to find out which return you have to days after the tax year you earned the income. If you file

file. your tax return or report a change in your self-employment

The federal income tax is a pay-as-you-go tax. You income after this time limit, the SSA may change its recmust pay the tax as you earn or receive income during the ords, but only to remove or reduce the amount. The SSA

year. An employee usually has income tax withheld from will not change its records to increase your self-employhis or her pay. If you do not pay your tax through withhold- ment income.

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Table 2. Which Forms Must I File?

If You Are A: You May Be Liable For: Use Form:

Sole proprietor Income tax 1040 and Schedule C1 or C–EZ

(Schedule F1 for farm business)

Self-employment tax 1040 and Schedule SE

Estimated tax 1040–ES

Employment taxes:

• Social security and Medicare 941 (943 for farm employees)

taxes and income tax

withholding

• Federal unemployment (FUTA) 940 or 940–EZ

tax

• Depositing employment taxes 81092

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 E3

Self-employment tax 1040 and Schedule SE

Estimated tax 1040–ES

Corporation or S corporation Income tax 1120 or 1120–A (corporation)

1120S (S corporation)

Estimated tax 1120–W (corporation only) and

81092

Employment taxes Same as sole proprietor

Excise taxes See Excise Taxes

S corporation shareholder Income tax 1040 and Schedule E3

Estimated tax 1040–ES

1 File a separate schedule for each business.

2 Do not use if you deposit taxes electronically.

3 Various other schedules may be needed.

Employment Taxes If you are not sure whether the people working for you

are your employees, see Publication 15–A, Employer’s

This section briefly discusses the employment taxes you Supplemental Tax Guide. That publication has information

must pay, the forms you must file to report them, and other to help you determine whether an individual is an emforms that must be filed when you have employees. ployee or an independent contractor. If you classify an

Employment taxes include the following. employee as an independent contractor, you can be held

liable for employment taxes for that worker plus a penalty. • Federal income tax withholding. An independent contractor is someone who is self-em-

• Social security and Medicare taxes. ployed. You do not generally have to withhold or pay any

taxes on payments to an independent contractor. • Federal unemployment (FUTA) tax.

If you have employees, you will need to get Publication Federal Income, Social Security, and

15, Circular E, Employer’s Tax Guide. If you have agricul- Medicare Taxes

tural employees, get Publication 51, Circular A, Agricultural Employer’s Tax Guide. These publications explain You generally must withhold federal income tax from your

your tax responsibilities as an employer. employee’s wages. To figure how much federal income tax

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to withhold from each wage payment, use the employee’s EIC payments to employees who give you a completed

Form W–4 (discussed later under Hiring Employees) and and signed Form W–5. For more information, see Publicathe methods described in Publication 15. tion 15.

Social security and Medicare taxes pay for benefits that

workers and their families receive under the Federal Insur- Wage Reporting—Form W–2 ance Contributions Act (FICA). Social security tax pays for

benefits under the old-age, survivors, and disability insur- After the calendar year is over, you must furnish copies of ance part of FICA. Medicare tax pays for benefits under the Form W–2, Wage and Tax Statement, to each employee hospital insurance part. You withhold part of these taxes to whom you paid wages during the year. You must also from your employee’s wages and you pay a matching send copies to the Social Security Administration. See amount yourself. To find out how much social security and Information Returns, later, for more information on Form Medicare tax to withhold and to pay, see Publication 15. W–2.

Which form do I file? Report these taxes on Form 941,

Employer’s Quarterly Federal Tax Return. (Farm employ- Excise Taxes

ers use Form 943, Employer’s Annual Tax Return for

Agricultural Employees.) 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. Federal Unemployment (FUTA) Tax • Manufacture, sell, or use certain products.

The federal unemployment tax is part of the federal and • Operate certain kinds of businesses. state program under the Federal Unemployment Tax Act

(FUTA) that pays unemployment compensation to workers • Receive payment for various kinds of services and

who lose their jobs. You report and pay FUTA tax sepa- facilities.

rately from social security and Medicare taxes and with- For more information on excise taxes, see Publication 510. held income tax. You pay FUTA tax only from your own

funds. Employees do not pay this tax or have it withheld Form 720. The federal excise taxes reported on Form from their pay. 720, Quarterly Federal Excise Tax Return, consist of sevWhich form do I file? Report federal unemployment tax eral broad categories, including the following taxes.

on Form 940, Employer’s Annual Federal Unemployment • Environmental taxes. (FUTA) Tax Return. Or, if you qualify, you can use the

simpler Form 940–EZ instead. See Publication 15 to find • Communications and air transportation taxes.

out if you can use this form. • Fuel taxes.

• Tax on the first retail sale of heavy trucks, trailers, Hiring Employees and tractors.

When hiring employees, have them fill out Form I–9 and • Luxury tax on passenger cars.

Form W–4. If your employees qualify for advance pay- • Manufacturers’ taxes on the sale or use of a variety ments of the earned income credit, they also must give you of different articles. a Form W–5.

Form I–9. You must verify that each new employee is Form 2290. There is a federal excise tax on certain trucks, legally eligible to work in the United States. Both you and truck tractors, and buses used on public highways. The tax the employee must complete the Immigration and Naturali- applies to vehicles having a taxable gross weight of 55,000 zation Service (INS) Form I–9, Employment Eligibility Ver- pounds or more. Report the tax on Form 2290, Heavy ification. You can get the form from INS offices or from the Highway Vehicle Use Tax Return. For more information, INS web site at www.ins.usdoj.gov. Call the INS at see the instructions for Form 2290. 1–800–375–5283 for more information about your responsibilities. Form 730. If you are in the business of accepting wagers

or conducting a wagering pool or lottery, you may be liable Form W–4. Each employee must fill out Form W–4, for the federal excise tax on wagering. Use Form 730, Employee’s Withholding Allowance Certificate. You will Monthly Tax on Wagering, to figure the tax on the wagers use the filing status and withholding allowances shown on you receive. this form to figure the amount of income tax to withhold

from your employee’s wages. Form 11–C. Use Form 11–C, Occupational Tax and Registration Return for Wagering, to register for any wagering Form W–5. An eligible employee who has a qualifying activity and to pay the federal occupational tax on wager- child is entitled to receive advance earned income credit ing. (EIC) payments with his or her pay during the year. To get

these payments, the employee must give you a properly ATF forms. If you produce, sell, or import guns, tobacco,

completed Form W–5, Earned Income Credit Advance or alcohol products, or if you manufacture equipment for

Payment Certificate. You are required to make advance their production, you may be liable for one or more excise

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taxes. Report these taxes on forms filed with the Bureau of

Alcohol, Tobacco, and Firearms (ATF). For more informa- Information Returns

tion, call the ATF National Revenue Center at

1 – 800 – 398 – 2282 or see the ATF web site at If you make or receive payments in your business, you

www.atf.treas.gov. may have to report them to the IRS on information returns.

The IRS compares the payments shown on the information

Depositing Taxes returns with each person’s income tax return to see if the

payments were included in income. You must give a copy

You generally have to deposit employment taxes, certain of each information return you are required to file to the

recipient or payer. In addition to the forms described be- excise taxes, corporate income tax, and S corporation low, you may have to use other returns to report certain taxes before you file your return. kinds of payments or transactions. For more details on Mail or deliver deposits with completed deposit cou- information returns and when you have to file them, see

pons to an authorized financial institution unless you make the Instructions for Forms 1099, 1098, 5498, and W–2G.

the deposits electronically, as discussed later.

To be on time, mailed deposits must arrive at the depos- Form 1099–MISC. Use Form 1099–MISC, Miscellaneous Income, to report certain payments you make in your itary by the due date. You may be charged a penalty for not

making deposits when due, unless you have reasonable trade or business. These payments include the following.

cause. See Penalties, later. • Payments of $600 or more for services performed

To help ensure proper crediting of your account, for your business by people not treated as your employees, such as subcontractors, attorneys, account- include the following on your check or money

order. ants, or directors.

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• Your EIN. • Rent payments of $600 or more, other than rents

paid to real estate agents. • Type of tax. • Prizes and awards of $600 or more that are not for • Tax period for the payment. services, such as winnings on TV or radio shows.

• Royalty payments of $10 or more. Deposit coupons. Use Form 8109, Federal Tax Deposit

Coupon, • Payments to certain crew members by operators of to deposit taxes. On each coupon, you must show fishing boats. the deposit amount, the type of tax, the period for which

you are making a deposit, and your telephone number. You also use Form 1099–MISC to report your sales of

Use a separate coupon for each tax and period. You must $5,000 or more of consumer goods to a person for resale

include a coupon with each deposit you make. anywhere other than in a permanent retail establishment.

Five to six weeks after you receive your employer identi- Form W–2. You must file Form W–2 to report payments fication number (EIN), as discussed earlier, the IRS will to your employees, such as wages, tips, and other com- send you a coupon book. If you have a deposit due and pensation, withheld income, social security, and Medicare there is not enough time to obtain a coupon book, you can taxes, and advance earned income credit payments. For get a blank coupon (Form 8109 –B) by calling more information on what to report on Form W–2, see the 1–800–829–1040. Instructions for Forms W–2 and W–3.

If you have not received your EIN and must make a

deposit, mail your payment with an explanation to the Form 8300. You must file Form 8300, Report of Cash

Internal Revenue Service Center where you file your re- Payments Over $10,000 Received in a Trade or Business,

turn. Make your check or money order payable to the if you receive more than $10,000 in cash in one transaction

United States Treasury. On the payment, write your name or two or more related business transactions. Cash includes U.S. and foreign coin and currency. It also includes (exactly as shown on Form SS–4), your address, the kind certain monetary instruments such as certain cashier’s of tax, the period covered, and the date you applied for an and traveler’s checks and money orders. For more infor- EIN. Do not use Form 8109–B in this situation.

mation, see Publication 1544, Reporting Cash Payments

of Over $10,000 (Received in a Trade or Business). Electronic deposit of taxes. Generally, taxpayers whose

total deposits of social security and Medicare taxes and

withheld income tax during previous years exceeded certain amounts are required to deposit taxes through the Penalties

Electronic Federal Tax Payment System (EFTPS). To be sure that all taxpayers pay their fair share of taxes, Taxpayers not required to make deposits by EFTPS the law provides penalties for not filing returns or paying

may enroll in the system, which will allow tax deposits taxes as required. Criminal penalties may be imposed for

without coupons, paper checks, or visits to an authorized willful failure to file, tax evasion, or making a false statedepositary. For more information, see Publication 15. ment.

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Failure to file tax returns. If you do not file your tax return trade, or profession. A necessary expense is one that is

by the due date, you may have to pay a penalty. The helpful and appropriate for your business, trade, or profespenalty is based on the tax not paid by the due date. See sion. An expense does not have to be indispensable to be

your tax return instructions for more information about this considered necessary.

penalty. The following are brief explanations of some expenses

that are of interest to people starting a business. There are Failure to pay tax. If you do not pay your taxes by the due many other expenses that you may be able to deduct. See date, you will have to pay a penalty for each month, or part your form instructions and Publication 535, Business Ex- of a month, that your taxes are not paid. For more informapenses. tion, see your tax return instructions.

Failure to withhold, deposit, or pay taxes. If you do not Business Start-Up Costs withhold income, social security, or Medicare taxes from

employees, or if you withhold taxes but do not deposit Business start-up costs are the expenses you incur before

them or pay them to the IRS, you may be subject to a you actually begin business operations. Your business penalty of the unpaid tax, plus interest. You may also be start-up costs will depend on the type of business you are subject to penalties if you deposit the taxes late. For more starting. They may include costs for advertising, travel, information, see Publication 15. surveys, and training. These costs are capital expenses.

Failure to follow information reporting requirements. You usually recover costs for a particular asset (such as

The following penalties apply if you are required to file machinery or office equipment) through depreciation (disinformation returns. For more information, see the General cussed next). Other qualifying start-up costs can be recovInstructions for Forms 1099, 1098, 5498, and W–2G. ered through amortization. This means you deduct them in

equal amounts over a period of 60 months or more. If you • Failure to file information returns. A penalty ap- do not choose to amortize these start-up costs, you gener- plies if you do not file information returns by the due ally cannot recover them until you sell or otherwise go out date, if you do not include all required information, or of business. if you report incorrect information. For more information on business start-up costs, see • Failure to furnish correct payee statements. A chapter 9 in Publication 535. penalty applies if you do not furnish a required statement to a payee by the required date, if you do not

include all required information, or if you report incor- Depreciation

rect information. If property you acquire to use in your business has a useful

life that extends substantially beyond the year it is placed Waiver of penalty. These penalties will not apply if you in service, you generally cannot deduct the entire cost as a can show that the failures were due to reasonable cause business expense in the year you acquire it. You must and not willful neglect. spread the cost over more than one tax year and deduct In addition, there is no penalty for failure to include all part of it each year. This method of deducting the cost of the required information, or for including incorrect informa- business property is called depreciation. tion, on a de minimis number of information returns if you

correct the errors by August 1 of the year the returns are Business property you must depreciate includes the

due. (To be considered de minimis, the number of returns following items.

cannot exceed the greater of 10 or 1

/2 of 1% of the total • Office furniture. number of returns you are required to file for the year.)

• Buildings. Failure to supply taxpayer identification number. If

you do not include your taxpayer identification number • Machinery and equipment.

(SSN or EIN) or the taxpayer identification number of

another person where required on a return, statement, or You can choose to deduct a limited amount of the cost of

other document, you may be subject to a penalty of $50 for certain depreciable property in the year you place it in

each failure. You may also be subject to the $50 penalty if service for use in your business. This deduction is known

you do not give your taxpayer identification number to as the “section 179 deduction.” You can also take a special

another person when it is required on a return, statement, depreciation allowance of 30% of the cost of qualified

or other document. property for the year the property is placed in service. For

more information about depreciation, the section 179 deduction, and a definition of qualified property, see PublicaBusiness Expenses tion 946, How To Depreciate Property.

You can deduct business expenses on your income tax Business Use of Your Home

return. These are the current operating costs of running

your business. To be deductible, a business expense must You may be able to deduct the expenses for the part of

be both ordinary and necessary. An ordinary expense is your home you use for business. The business use of your

one that is common and accepted in your field of business, home must meet specific requirements before you can

Page 9
deduct any of these expenses. Even then, your deduction Depreciation Lease payments Registration

may be limited. Garage rent Licenses Repairs

To qualify to claim expenses for the business use of Gas Oil Tires

your home, you must meet the following tests. Insurance Parking fees Tolls

If you use your vehicle for both business and personal 1) Your use of the business part of your home must be: purposes, you must divide your expenses between busia) Exclusive (however, see Exceptions to exclusive ness and personal use. You can divide your expenses

use, based on the miles driven for each purpose. later),

b) Regular, and Example. You are the sole proprietor of a flower shop.

c) For your trade or business, and You drove your van 20,000 miles during the year. 16,000

miles were for delivering flowers to customers and 4,000

2) The business part of your home must be one of the miles were for personal use. You can claim only 80%

following: (16,000 ÷ 20,000) of the cost of operating your van as a

business expense.

a) Your principal place of business,

Standard mileage rate. Instead of figuring actual ex- b) A place where you meet or deal with clients or penses, you may be able to use the standard mileage rate customers in the normal course of your trade or to figure the deductible costs of operating your car, van, business, or pickup, or panel truck for business purposes. You can use

c) A separate structure (not attached to your home) the standard mileage rate for a vehicle you own or lease.

you use in connection with your trade or busi- The standard mileage rate is a specified amount of money

ness. you can deduct for each business mile you drive. It is

announced annually by the IRS. To figure your deduction,

multiply your business miles by the standard mileage rate Exceptions to exclusive use. You do not have to meet for the year. the exclusive use test if you use part of your home: Generally, if you use the standard mileage rate,

1) For the storage of inventory or product samples, or you cannot deduct your actual expenses. How- CAUTION ever, you may be able to deduct business-related

!

2) As a day-care facility. parking fees, tolls, interest on your car loan, and certain

state and local taxes. Principal place of business. Your home office will qualify as your principal place of business for deducting ex- Choosing the standard mileage rate. If you want to penses for its use if you meet both of the following use the standard mileage rate for a car you own, you must requirements. choose to use it in the first year the car is available for use

• You use it exclusively and regularly for the adminis- in your business. In later years, you can choose to use the

trative or management activities of your trade or standard mileage rate or actual expenses.

business. If you want to use the standard mileage rate for a car

you lease, you must choose to use it for the entire lease • You have no other fixed location where you conduct period. For leases that began on or before December 31, substantial administrative or management activities 1997, the standard mileage rate must be used for the of your trade or business. entire part of the lease period (including renewals) after

that date.

Which form do I file? If you file Schedule C (Form 1040), Additional information. For more information about the use Form 8829, Expenses for Business Use of Your

Home, rules for claiming car and truck expenses, see Publication to figure your deduction. If you file Schedule F 463, Travel, Entertainment, Gift, and Car Expenses. (Form 1040) or you are a partner, you can use the worksheet in Publication 587, Business Use of Your Home

(Including Use by Day-Care Providers).

More information. For more information about business Recordkeeping

use of your home, see Publication 587. This part explains why you must keep records, what kinds

of records you must keep, and how to keep them. It also Car and Truck Expenses explains how long you must keep your records for federal

tax purposes. A sample recordkeeping system is illus- If you use your car or truck in your business, you can trated at the end of this part. deduct the costs of operating and maintaining it. You

generally can deduct either your actual expenses or the

standard mileage rate. Why Keep Records?

Actual expenses. If you deduct actual expenses, you can Everyone in business must keep records. Good records

deduct the cost of the following items: will help you do the following.

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Monitor the progress of your business. You need good Supporting Documents

records to monitor the progress of your business. Records

can show whether your business is improving, which items Purchases, sales, payroll, and other transactions you have

are selling, or what changes you need to make. Good in your business will generate supporting documents. Supporting documents include sales slips, paid bills, invoices, records can increase the likelihood of business success.

receipts, deposit slips, and canceled checks. These docuPrepare your financial statements. You need good rec- ments contain the information you need to record in your

ords to prepare accurate financial statements. These in- books.

clude income (profit and loss) statements and balance It is important to keep these documents because they

sheets. These statements can help you in dealing with support the entries in your books and on your tax return.

your bank or creditors. Keep them in an orderly fashion and in a safe place. For

instance, organize them by year and type of income or • An income statement shows the income and ex- expense. penses of the business for a given period of time.

• A balance sheet Gross receipts. Gross receipts are the income you re- shows the assets, liabilities, and

ceive from your business. You should keep supporting your equity in the business on a given date. documents that show the amounts and sources of your

gross receipts. Documents that show gross receipts in- Identify source of receipts. You will receive money or clude the following. property from many sources. Your records can identify the

source of your receipts. You need this information to sepa- • Cash register tapes.

rate business from nonbusiness receipts and taxable from • Bank deposit slips. nontaxable income.

• Receipt books.

Keep track of deductible expenses. You may forget • Invoices.

expenses when you prepare your tax return unless you • Credit card charge slips. record them when they occur.

• Forms 1099–MISC.

Prepare your tax returns. You need good records to

prepare your tax return. These records must support the

income, expenses, and credits you report. Generally, Purchases. Purchases are the items you buy and resell to

these are the same records you use to monitor your busi- customers. If you are a manufacturer or producer, this

ness and prepare your financial statements. includes the cost of all raw materials or parts purchased for

manufacture into finished products. Your supporting docuSupport items reported on tax returns. You must keep ments should show the amount paid and that the amount

was for purchases. Documents for purchases include the your business records available at all times for inspection following. by the IRS. If the IRS examines any of your tax returns, you

may be asked to explain the items reported. A complete • Canceled checks. set of records will speed up the examination.

• Cash register tape receipts.

Kinds of Records To Keep • Credit card sales slips.

Except in a few cases, the law does not require any special • Invoices.

kind of records. You can choose any recordkeeping sys- These records will help you determine the value of your tem suited to your business that clearly shows your in- inventory at the end of the year. See Publication 538 for

come. information on methods for valuing inventory.

The business you are in affects the type of records you

need to keep for federal tax purposes. You should set up Expenses. Expenses are the costs you incur (other than

your recordkeeping system using an accounting method purchases) to carry on your business. Your supporting

that clearly shows your income for your tax year. See documents should show the amount paid and that the

Accounting Method, earlier. If you are in more than one amount was for a business expense. Documents for exbusiness, you should keep a complete and separate set of penses include the following.

records for each business. • Canceled checks. Your recordkeeping system should include a summary

of your business transactions. This summary is ordinarily • Cash register tapes.

made in your books (for example, accounting journals and • Account statements. ledgers). Your books must show your gross income, as

well as your deductions and credits. For most small busi- • Credit card sales slips.

nesses, the business checkbook (discussed later) is the • Invoices. main source for entries in the business books. In addition,

you must keep supporting documents, explained next. • Petty cash slips for small cash payments.

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A petty cash fund allows you to make small pay- electronic funds transfer • amount transferred. ments without having to write checks for small • payee’s name. amounts. Each time you make a payment from

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• date the transfer was this fund, you should make out a petty cash slip and attach posted to the account by it to your receipt as proof of payment. the financial institution.

Travel, transportation, entertainment, and gift ex- credit card • amount charged. penses. Special recordkeeping rules apply to these ex- • payee’s name. penses. For more information, see Publication 463. • transaction date.

Employment taxes. There are specific employment

tax records you must keep. See Publication 15.

Proof of payment of an amount, by itself, does not Assets. Assets are the property, such as machinery and establish that you are entitled to a tax deduction. furniture, that you own and use in your business. You must CAUTION You should also keep other documents, such as

!

keep records to verify certain information about your busi- credit card sales slips and invoices, discussed previously. ness assets. You need records to figure the annual depreciation and the gain or loss when you sell the assets. Your

records should show the following information. Recording Business Transactions

• When and how you acquired the asset. A good recordkeeping system includes a summary of your

• Purchase price. business transactions. (Your business transactions are

shown on the supporting documents just discussed.) Busi- • Cost of any improvements. ness transactions are ordinarily summarized in books

• Section 179 deduction taken. called journals and ledgers. You can buy them at your local

stationery or office supply store. • Deductions taken for depreciation. A journal is a book where you record each business • Deductions taken for casualty losses, such as losses transaction shown on your supporting documents. You

resulting from fires or storms. may have to keep separate journals for transactions that

occur frequently. • How you used the asset. A ledger is a book that contains the totals from all of • When and how you disposed of the asset. your journals. It is organized into different accounts.

• Selling price. Whether you keep journals and ledgers and how you

keep them depends on the type of business you are in. For • Expenses of sale. example, a recordkeeping system for a small business

might include the following items. Documents that may show this information include the • Business checkbook. following.

• Daily summary of cash receipts. • Purchase and sales invoices.

• Monthly summary of cash receipts. • Real estate closing statements.

• Check disbursements journal. • Canceled checks.

• Depreciation worksheet.

What if I don’t have a canceled check? If you do not • Employee compensation record.

have a canceled check, you may be able to prove payment The business checkbook is explained next. The other with certain financial account statements prepared by fi- items are illustrated later under Sample Record System. nancial institutions. These include account statements prepared for the financial institution by a third party. These The system you use to record business transac- account statements must be highly legible. The following is tions will be more effective if you follow good a list of acceptable account statements. recordkeeping practices. For example, record exTIP

THEN the statement must penses when they occur, and identify the source of reIF payment is by... show the... corded receipts. Generally, it is best to record transactions

on a daily basis.

check • check number.

• amount. Business checkbook. One of the first things you should • payee’s name. do when you start a business is open a business checking

• date the check amount account. You should keep your business account separate

was posted to the account from your personal checking account. by the financial institution. The business checkbook is your basic source of information for recording your business expenses. You should

Page 12
deposit all daily receipts in your business checking ac- If the totals do not agree, check the individual

count. You should check your account for errors by recon- amounts to see if an error was made in your check

ciling it. See Reconciling the checking account, later. stub record or in the related entry in your check

Consider using a checkbook that allows enough space disbursements journal.

to identify the source of deposits as business income, 2) Adding the deposit amounts in your checkbook. personal funds, or loans. You should also note on the Compare that total with the monthly total in your deposit slip the source of the deposit and keep copies of all cash receipt book, if you have one. If the totals do slips. not agree, check the individual amounts to find any You should make all payments by check to document errors.

business expenses. Write checks payable to yourself only

when making withdrawals from your business for personal If your checkbook and journal entries still disagree, then

use. Avoid writing checks payable to cash. If you must refigure the running balance in your checkbook to make

write a check for cash to pay a business expense, include sure additions and subtractions are correct.

the receipt for the cash payment in your records. If you When your checkbook balance agrees with the balance

cannot get a receipt for a cash payment, you should make figured from the journal entries, you may begin reconciling

an adequate explanation in your records at the time of your checkbook with the bank statement. Many banks print

payment. a reconciliation worksheet on the back of the statement.

To reconcile your account, follow these steps. Use the business account for business purposes

only. Indicate the source of deposits and the type 1) Compare the deposits listed on the bank statement

of expense in the checkbook. with the deposits shown in your checkbook. Note all

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differences in the dollar amounts.

Reconciling the checking account. When you re- 2) Compare each canceled check, including both check ceive your bank statement, make sure the statement, your number and dollar amount, with the entry in your checkbook, and your books agree. The statement balance checkbook. Note all differences in the dollar

may not agree with the balance in your checkbook and amounts. Mark the check number in the checkbook books if the statement: as having cleared the bank. After accounting for all

• Includes bank charges you did not enter in your checks returned by the bank, those not marked in

books and subtract from your checkbook balance, or your checkbook are your outstanding checks.

• Does not include deposits made after the statement 3) Prepare a bank reconciliation. One is illustrated later

date or checks that did not clear your account before under Sample Record System.

the statement date. 4) Update your checkbook and journals for items shown

on the reconciliation as not recorded (such as ser- By reconciling your checking account, you will: vice charges) or recorded incorrectly.

• Verify how much money you have in the account, At this point, the adjusted bank statement balance should

equal your adjusted checkbook balance. If you still have • Make sure that your checkbook and books reflect all differences, check the previous steps to find the errors. bank charges and the correct balance in the checking account, and

• Correct any errors in your bank statement, check- Bookkeeping System

book, and books. You must decide whether to use a single- or a double-entry

bookkeeping system. The single-entry system of book- You should reconcile your checking account each keeping is the simplest to maintain, but it may not be month. suitable for everyone. You may find the double-entry system better because it has built-in checks and balances to

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assure accuracy and control. Before you start to reconcile your monthly bank statement, check your own figures. Begin with the balance Single-entry. A single-entry system is based on the in- shown in your checkbook at the end of the previous month. come statement (profit or loss statement). It can be a To this balance, add the total cash deposited during the simple and practical system if you are starting a small month and subtract the total cash disbursements. business. The system records the flow of income and After checking your figures, the result should agree with expenses through the use of: your checkbook balance at the end of the month. If the

result does not agree, you may have made an error in 1) A daily summary of cash receipts, and

recording a check or deposit. You can find the error by 2) Monthly summaries of cash receipts and disburse- doing the following. ments.

1) Adding the amounts on your check stubs and comparing that total with the total in the “amount of Double-entry. A double-entry bookkeeping system uses

check” column in your check disbursements journal. journals and ledgers. Transactions are first entered in a

Page 13
journal and then posted to ledger accounts. These ac- See Revenue Procedure 98–25 in Cumulative Bulletin

counts show income, expenses, assets (property a busi- 1998–1 for more information.

ness owns), liabilities (debts of a business), and net worth

(excess of assets over liabilities). You close income and Microfilm

expense accounts at the end of each tax year. You keep

asset, liability, and net worth accounts open on a perma- Microfilm and microfiche reproductions of general books of

nent basis. accounts, such as cash books, journals, voucher registers,

and ledgers, are accepted for recordkeeping purposes if In the double-entry system, each account has a left side

for debits and a right side for credits. It is self-balancing they comply with Revenue Procedure 81–46 in Cumulabecause you record every transaction as a debit entry in tive Bulletin 1981–2.

one account and as a credit entry in another.

Under this system, the total debits must equal the total Electronic Storage System credits after you post the journal entries to the ledger

accounts. If the amounts do not balance, you have made Records maintained in an electronic storage system are an error and you must find and correct it. accepted for recordkeeping purposes if the system com- An example of a journal entry showing a payment of rent plies with Revenue Procedure 97–22 in Cumulative Bullein October is shown next. tin 1997–1.

An electronic storage system is one that either images

General Journal hardcopy (paper) books and records or transfers computerized books and records to an electronic storage media, Date Description of Entry Debit Credit such as an optical disk.

Oct. 5 Rent expense 780.00 How Long To Keep Records

You must keep your records as long as they may be Cash 780.00 needed for the administration of any provision of the Internal Revenue Code. 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.

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. Table 3 on page 15

contains the periods of limitations that apply to income tax

Computerized System returns. Unless otherwise stated, the years refer to the

period after the return was filed. Returns filed before the

There are computer software packages you can use for due date are treated as filed on the due date.

recordkeeping. They can be purchased in many retail Keep copies of your filed tax returns. They help in stores. These packages are very useful and relatively easy preparing future tax returns and making computa- to use; they require very little knowledge of bookkeeping tions if you later file an amended return.

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and accounting.

If you use a computerized system, you must be able to

produce sufficient legible records to support and verify Employment taxes. If you have employees, you must

entries made on your return and determine your correct tax keep all employment tax records for at least 4 years after

liability. To meet this qualification, the machine-sensible the date the tax becomes due or is paid, whichever is later.

records must reconcile with your books and return. These Assets. Keep records relating to property until the period records must provide enough detail to identify the underly- of limitations expires for the year in which you dispose of ing source documents. the property in a taxable disposition. You must keep these You must also keep all machine-sensible records and a records to figure any depreciation, amortization, or deple- complete description of the computerized portion of your tion deduction, and to figure your basis for computing gain recordkeeping system. This documentation must be suffi- or loss when you sell or otherwise dispose of the property. ciently detailed to show all of the following items. Generally, if you received property in a nontaxable ex-

• Functions being performed as the data flows through change, your basis in that property is the same as the basis

of the property you gave up, increased by money you paid. the system.

You must keep the records on the old property, as well as • Controls used to ensure accurate and reliable on the new property, until the period of limitations expires processing. for the year in which you dispose of the new property in a

• Controls used to prevent the unauthorized addition, taxable disposition.

alteration, or deletion of retained records. Records for nontax purposes. When your records are

• Charts of accounts and detailed account descrip- no longer needed for tax purposes, do not discard them

tions. until you check to see if you have to keep them longer for

Page 14
other purposes. For example, your insurance company or for the total of the outstanding slips. (See the Check Discreditors may require you to keep them longer than the IRS bursements Journal entry for check number 92.) This redoes. stores the fund to its fixed amount of $50. He then

summarizes the slips and enters them in the proper colSample Record System umns in the monthly check disbursements journal.

This example illustrates a single-entry system used by 2. Monthly Summary of Cash Receipts Henry M. Brown, who is the sole proprietor of a small (Page 19) automobile body shop. Henry uses part-time help, has no

inventory of items held for sale, and uses the cash method This shows the income activity for the month. Henry carries of accounting. the total monthly net sales shown in this summary for These sample records should not be viewed as a rec- January ($4,865.05) to his Annual Summary. ommendation of how to keep your records. They are in- To figure total monthly net sales, Henry reduces the tended only to show how one business keeps its records. total monthly receipts by the sales tax imposed on his

customers and turned over to the state. He cannot take a

deduction for sales tax turned over to the state because he 1. Daily Summary of Cash Receipts only collected the tax. He does not include the tax in his (Page 18) income.

This summary is a record of cash sales for the day. It

accounts for cash at the end of the day over the amount in 3. Check Disbursements Journal (Page 20) the Change and Petty Cash Fund at the beginning of the

day. Henry enters checks drawn on the business checking

Henry takes the cash sales entry from his cash register account in the Check Disbursements Journal each day. All

tape. If he had no cash register, he would simply total his checks are prenumbered and each check number is listed

cash sale slips and any other cash received that day. and accounted for in the column provided in the journal.

He carries the total receipts shown in this summary for Frequent expenses have their own headings across the

January 3 ($267.80), including cash sales ($263.60) and sheet. He enters in a separate column expenses that

sales tax ($4.20), to the Monthly Summary of Cash Re- require comparatively numerous or large payments each

ceipts. month, such as materials, gross payroll, and rent. Under

the General Accounts column, he enters small expenses

Petty cash fund. Henry uses a petty cash fund to make that normally have only one or two monthly payments,

small payments without having to write checks for small such as licenses and postage.

amounts. Each time he makes a payment from this fund, Henry does not pay personal or nonbusiness expenses

he makes out a petty cash slip and attaches it to his receipt by checks drawn on the business account. If he did, he

as proof of payment. He sets up a fixed amount ($50) in his would record them in the journal, even though he could not

petty cash fund. The total of the unspent petty cash and the deduct them as business expenses.

amounts on the petty cash slips should equal the fixed Henry carries the January total of expenses for materiamount of the fund. When the totals on the petty cash slips als ($1,083.50) to the Annual Summary. Similarly, he enapproach the fixed amount, he brings the cash in the fund ters monthly total of expenses for telephone, truck, auto,

back to the fixed amount by writing a check to “Petty Cash” etc., in the appropriate columns of that summary.

Table 3. Period of Limitations

THEN the period of IF... limitations is:

1. You owe additional tax and situations (2), (3), and (4), below, do not apply to you 3 years

2. You do not report income that you should report, and it is more than 25% of the 6 years

gross income shown on the return

3. You file a fraudulent income tax return No limit

4. You do not file a return No limit

5. You file a claim for credit or refund* after you file your return Later of: 3 years or

2 years after tax

was paid

6. Your claim is due to a bad debt deduction 7 years

7. Your claim is due to a loss from worthless securities 7 years

*

 Individuals file a claim for credit or refund on Form 1040X.

Page 15
4. Employee Compensation Record property’s cost or other basis (after subtracting the section

179 deduction). Depreciation, the section 179 deduction, (Page 22) and the special depreciation allowance are discussed in

This record shows the following information. Publication 946. Henry uses the information in the worksheet to complete Form 4562, Depreciation and Amortiza- • The number of hours Henry’s employee worked in a tion (not illustrated). pay period.

Henry must take depreciation in the year it is • The employee’s total pay for the period. allowable. He cannot deduct in the current year

• The deductions Henry withheld in figuring the the allowable depreciation he did not take in a

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employee’s net pay. prior year. If he does not deduct the correct depreciation,

he may be able to make a correction by filing Form 1040X, • The monthly gross payroll. Amended U.S. Individual Income Tax Return, or by changHenry carries the January gross payroll ($520) to the ing his accounting method. For more information on how to

Annual Summary. correct an incorrect depreciation deduction, see chapter 1

in Publication 946.

5. Annual Summary (Page 22)

This annual summary of monthly cash receipts and ex- 7. Bank Reconciliation (Page 23) pense totals provides the final amounts to enter on Henry’s

tax return. He figures the cash receipts total from the total Henry reconciles his checkbook with his bank statement

of monthly cash receipts shown in the Monthly Summary of and prepares a bank reconciliation for January as follows.

Cash Receipts. He figures the expense totals from the 1) Henry begins by entering his bank statement bal- totals of monthly expense items shown in the Check Disance. bursements Journal. As in the journal, he keeps each

major expense in a separate column. 2) Henry compares the deposits listed on the bank Henry carries the cash receipts total shown in the an- statement with deposits shown in his checkbook. nual summary ($47,440.95) to Part I of Schedule C (not Two deposits shown in his checkbook— $701.33 illustrated). He carries the total for materials ($10,001.00) and $516.08—were not on his bank statement. He

to Part II of Schedule C. enters these two amounts on the bank reconciliation.

A business that keeps materials and supplies on He adds them to the bank statement balance of

$1,458.12 to arrive at a subtotal of $2,675.53. hand generally must complete the inventory lines

in Part III of Schedule C. However, there are no 3) After comparing each canceled check with his check- CAUTION

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inventories of materials and supplies in this example. book, Henry found four outstanding checks totaling Henry buys parts and supplies on a per-job basis; he does $526.50. He subtracts this amount from the subtotal

not keep them on hand. in (2). The result of $2,149.03 is the adjusted bank

Henry enters annual totals for interest, rent, taxes, and statement balance.

wages on the appropriate lines in Part II of Schedule C. 4) Henry enters his checkbook balance on the bank The total for taxes and licenses includes the employer’s reconciliation.

share of social security and Medicare taxes, and the busi- 5) Henry discovered that he mistakenly entered a de- ness license fee. He enters the total of other annual busiposit of $600.40 in his checkbook as $594.40. He ness expenses on the “Other expenses” line of Schedule

C. adds the difference ($6.00) to the checkbook balance of $2,153.03. There was a $10.00 bank service

charge on his bank statement that he subtracts from

6. Depreciation Worksheet (Page 22) the checkbook balance. The result is the adjusted

checkbook balance of $2,149.03. This equals his ad- This worksheet shows the information used in figuring the justed bank statement balance computed in (3). depreciation allowed on assets used in Henry’s business.

Henry figures the depreciation using the modified acceler- The only book adjustment Henry needs to make is to the

Check Disbursements Journal for the $10 bank service ated cost recovery system (MACRS). He also chooses to charge. He does not need to adjust the Monthly Summary deduct $24,000 of the cost of the tow truck purchased and of Cash Receipts because he correctly entered the Janu- placed in service in his trade or business during the year.

This is the ary 8 deposit of $600.40 in that record. “section 179 deduction.” He also chooses to

deduct the special depreciation allowance for the properties that qualify. The allowance is an additional 30% of the

Page 16
Free tax services, later. The kit consists of the following

How To Get More Information items.

Forms: This section describes the help the IRS and other federal

agencies offer to taxpayers who operate their own busi- • SS–4, Application for Employer Identification Numnesses. ber

• 1040–ES, Estimated Tax for Individuals Internal Revenue Service • 9779, EFTPS Business Enrollment Form

The following describes assistance provided by the IRS.

You can order free publications and forms, ask tax ques- Publications: tions, and get more information from the IRS in several

ways. By selecting the method that is best for you, you will • 509, Tax Calendars for 2002

have quick and easy access to tax help. See Free tax • 583, Starting a Business and Keeping Records services, later.

• 594, The IRS Collection Process

Contacting your Taxpayer Advocate. If you have attempted to deal with an IRS problem unsuccessfully, you • 910, Guide to Free Tax Services

should contact your Taxpayer Advocate. • 1544, Reporting Cash Payments of Over $10,000

The Taxpayer Advocate represents your interests and (Received in a Trade or Business) concerns within the IRS by protecting your rights and

resolving problems that have not been fixed through normal channels. While Taxpayer Advocates cannot change Free tax services. To find out what services are available, get Publication 910, Guide to Free Tax Services. It the tax law or make a technical tax decision, they can clear contains a list of free tax publications and an index of tax up problems that resulted from previous contacts and topics. It also describes other free tax information services, ensure that your case is given a complete and impartial including tax education and assistance programs and a list review.

of TeleTax topics. To contact your Taxpayer Advocate:

Personal computer. With your personal com- • Call the Taxpayer Advocate at 1–877–777–4778. puter and modem, you can access the IRS on the

• Call the IRS at 1–800–829–1040. Internet at www.irs.gov. While visiting our web

site, you can: • Call, write, or fax the Taxpayer Advocate office in

your area. • Find answers to questions you may have.

• Call 1–800–829–4059 if you are a TTY/TDD user. • Download forms and publications or search for forms

and publications by topic or keyword.

For more information, see Publication 1546, The Tax- • View forms that may be filled in electronically, print payer Advocate Service of the IRS. the completed form, and then save the form for recordkeeping. Small Business Tax Education Program. Small business owners and other self-employed individuals can learn • View Internal Revenue Bulletins published in the last

about business taxes through a unique partnership be- few years.

tween the IRS and local organizations. Through work- • Search regulations and the Internal Revenue Code. shops or in-depth tax courses, instructors provide training

on starting a business, recordkeeping, preparing business • Receive our electronic newsletters on hot tax issues

tax returns, self-employment tax issues, and employment and news.

taxes. • Get information on starting and operating a small Some courses are offered free as a community service. business. Courses given by an educational facility may include costs

for materials and tuition. Other courses may have a nomi- You can also reach us with your computer using File nal fee to offset administrative costs of sponsoring organi- Transfer Protocol at ftp.irs.gov. zations.

For more information about this program, call the IRS TaxFax Service. Using the phone attached to Monday through Friday during regular business hours and your fax machine, you can receive forms and ask for your Taxpayer Education Coordinator. Check your instructions by calling 703–368–9694. Follow

telephone book for the local number of the IRS office the directions from the prompts. When you order forms, closest to you or you can call 1–800–829–1040. enter the catalog number for the form you need. The items

you request will be faxed to you. Your Business Tax Kit. Your Business Tax Kit is an For help with transmission problems, call the FedWorld assortment of IRS forms and publications to help taxpay- Help Desk at 703–487–4608. ers who operate their own businesses. To order the kit, see

Page 17
1. Daily Summary of Cash Receipts

Date

TOTAL RECEIPTS

Cash sales

Sales tax

Cash in register (including unspent petty cash)

Cash on hand

Coins

Bills

Checks

TOTAL CASH IN REGISTER

Add: Petty cash slips

TOTAL CASH

Less: Change and petty cash

Petty cash slips

Coins and bills

(unspent petty cash)

TOTAL CHANGE AND PETTY CASH FUND

TOTAL CASH RECEIPTS





January 3, 20 —

263.60

4.20

267.80

300.80

17.00

317.80

50.00

267.80

17.00

33.00

23.75

143.00

134.05

Page 18
2. Monthly Summary of Cash Receipts

Year 20— Month January

Day Net Sales Sales Tax Daily Receipts Deposit

3 263.60 4.20 267.80

4 212.00 3.39 215.39

5 194.40 3.10 197.50 680.69

6 222.40 3.54 225.94

7 231.15 3.68 234.83

8 137.50 2.13 139.63 600.40

10 187.90 2.99 190.89

11 207.56 3.31 210.87 401.76

12 128.95 2.05 131.00

13 231.40 3.77 235.17

14 201.28 3.21 204.49

15 88.01 1.40 89.41 660.07

17 210.95 3.36 214.31

18 221.80 3.53 225.33 439.64

19 225.15 3.59 228.74

20 221.93 3.52 225.45

21 133.53 2.13 135.66 589.85

22 130.84 2.08 132.92

24 216.37 3.45 219.82 352.74

25 220.05 3.50 223.55

26 197.80 3.15 200.95

27 272.49 4.34 276.83 701.33

28 150.64 2.40 153.04

29 224.05 3.56 227.61

31 133.30 2.13 135.43 516.08

TOTALS 4,865.05 77.51 4,942.56 4,942.56

Page 19
3. Check Disbursements Journal

Year 20— Month January

Federal FICA

Withheld Social FICA

Check Amount of Gross Income Security Medicare

Day Paid To # Check Materials Payroll Tax Reserve Reserve

3 Dale Advertising 74 85.00

4 City Treasurer 75 35.00

4 Auto Parts, Inc. 76 203.00 203.00

4 John E. Marks 77 214.11 260.00 (20.00) (16.12) (3.77)

6 Henry Brown 78 250.00

6 Mike’s Deli 79 36.00

6 Joe’s Service Station 80 74.50 29.50

6 ABC Auto Paint 81 137.50 137.50

7 Henry Brown 82 225.00

14 Telephone Co. 83 27.00

National Bank

15 (Tax Deposit) 84 119.56 40.00 32.24 7.54

18 National Bank 85 90.09

18 Auto Parts, Inc. 86 472.00 472 .00

18 Henry Brown 87 275.00

18 John E. Marks 88 214.11 260.00 (20.00) (16.12) (3.77)

21 Electric Co. 89 175.30

21 M.B. Ignition 90 66.70 66.70

21 Baker’s Fender Co. 91 9.80 9.80

21 Petty Cash 92 17.00 15.00

21 Henry Brown 93 225.00

25 Baker’s Fender Co. 94 150.00 150.00

25 Enterprise Properties 95 300.00

25 State Treasurer 96 12.00

25 State Treasurer 97 65.00

3,478.67 1,083.50 520.00 -0- -0- -0-

Bank service charge 10.00

TOTALS 3,488.67 1,083.50 520.00 -0- -0- -0-

Page 20
3. Check Disbursements Journal (Continued)

State

Withheld Employer’s

Income FICA Truck/

Tax Tax Electric Interest Rent Telephone Auto Drawing General Accounts

Advertising 85.00

License 35.00

(6.00)

250.00

Shop

Holiday Party 36.00

45.00

225.00

27.00

39.78

18.09 Loan 72.00

275.00

(6.00)

175.30

Postage 2.00

225.00

300.00

12.00

Sales Tax 65.00

-0- 39.78 175.30 18.09 300.00 27.00 45.00 975.00 295.00

10.00

-0- 39.78 175.30 18.09 300.00 27.00 45.00 975.00 305.00

Page 21
4. Employee Compensation Record

Pay

Period

Ending

Date

Paid S M T W T F S S M T W T F S

Total

Regular

Hours Overtime

Regular

Rate

Overtime

Rate Total

Social

Security

$6.50 .

.

.

$260.00

.

1 - 1 1 - 4 5 5 5 5 5 5 4 6 40

Medicare

Federal

Income

Tax

State

Income

Tax Net Pay

Hours Worked Earnings Deductions

1 - 15 1 - 18 4 4 4 4 4 2 4 3 4 4 3 40 $6.50 $260.00

$520.00

$16.12

$16.12

$32.24

$3.77

$3.77

$7.54

$20.00 $6.00 $214.11

$20.00 $6.00 $214.11

80 . . $40.00 $12.00 $428.22

.

. . $1,262.40 $78.23 $18.31 $100.00 $30.00 $1,035.86

. ... .

Name John E. Marks

QUARTERLY TOTALS

Address 1 Elm St., Anytown, NJ 07101

Phone 555-6075

Soc. Sec. No. 567-00-8901

Date of Birth 12-21-65

No. of Exemptions 1 / single

Full Time

X Part Time

5. Annual Summary

Month

Cash

Receipts

Gross

Payroll

FICA

Taxes

Bank

Charges Electric Interest Insurance Rent Telephones

Truck/

Auto Misc.

Materials/

Supplies Advertising

Office

Expenses

Taxes/

Licenses

January

February

March

December

TOTALS

$4,865.05 $1,083.50 $520.00 $39.78 $10.00 $175.30 $18.09 . $300.00 $27.00 $45.00 $85.00 $36.00 $100.00 $2.00

3,478.32 874.93 235.40 17.68 7.50 153.10 18.09 210.00 300.00 21.50 28.50 . . . .

3,942.00 724.90 507.00 38.08 11.25 145.81 18.09 . 300.00 32.10 51.30 . . . .

3,656.52 609.23 520.00 39.78 10.00 169.00 18.09 . 300.00 23.13 37.62 . 4.00 . 71.91

$47,440.95 $420.00 $10,001.00 $5,434.00 $408.09 $92.30 $1,642.37 $217.08 $3,600.00 $324.09 $571.46 $85.00 $40.00 $218.00 $344.00

6. Depreciation Worksheet

Description of Property

Date Placed

in Service

Cost or

Other Basis

Business/

Investment

Use %

Section 179

Deduction

and Special

Allowance

Depreciation Prior

Years

Basis for

Depreciation

Method/

Convention

Recovery

Period

Rate or

Table %

Depreciation

Deduction

1 - 3 Equipment— Transmission Jack 3,000 100% 900 — 2,100 200 DB/HY 7 14.29% $300

Pickup Truck (used) 1 - 3 8,000 100% — — 8,000 200 DB/HY 5 20% 1,600

1 - 3 Heavy Duty

Tow Truck 30,000 100% 25,800 — 4,200 200 DB/HY 5 20% 840

1 - 3 Equipment— Engine Hoist 4,000 100% 1,200 — 2,800 200 DB/HY 7 14.29% 400

$3,140

Page 22
7. Bank Reconciliation as of

Date

TOTAL DEPOSITS NOT CREDITED

Closing balance shown on bank statement

Add deposits not credited:

Subtract outstanding checks:

No.

TOTAL OUTSTANDING CHECKS

Balance shown in checkbook

Add:

Subtract:

Adjusted checkbook balance





January 31, 20 —

1,458.12

701.33

1,217.41

526.50

2,153.03

6.00

2,149.03

2,159.03

10.00

66.70

9.80

300.00

516.08

1/28

1/31

Subtotal 2,675.53

150.00

90

91

94

95

Adjusted balance per bank statement 2,149.03

Deposit of $600.40 for

1/8 entered as

$594.40 (difference)

Bank service charge

Page 23
Phone. Many services are available by phone. • Eastern part of U.S. and foreign addresses:

Eastern Area Distribution Center

P.O. Box 85074

Richmond, VA 23261–5074 • Ordering forms, instructions, and publications. Call

1–800–829–3676 to order current and prior year

forms, instructions, and publications. CD-ROM. You can order IRS Publication 1796,

Federal Tax Products on CD-ROM, and obtain: • Asking tax questions. Call the IRS with your tax

questions at 1–800–829–1040. • Current tax forms, instructions, and publications. • TTY/TDD equipment. If you have access to TTY/

TDD equipment, call 1–800–829–4059 • Prior-year tax forms and instructions. to ask tax

questions or to order forms and publications. • Popular tax forms that may be filled in electronically,

printed out for submission, and saved for record- • TeleTax topics. Call 1–800–829–4477 to listen to

keeping. pre-recorded messages covering various tax topics.

• Internal Revenue Bulletins.

Evaluating the quality of our telephone services. To The CD-ROM can be purchased from National Techni- ensure that IRS representatives give accurate, courteous, cal Information Service (NTIS) by calling 1–877– and professional answers, we evaluate the quality of our 233–6767 or on the Internet at www.irs.gov. The first telephone services in several ways. release is available in mid-December and the final release

is available in late January. • A second IRS representative sometimes monitors IRS Publication 3207, Small Business Resource Guide, live telephone calls. That person only evaluates the is an interactive CD-ROM that contains information impor- IRS assistor and does not keep a record of any tant to small businesses. It is available in mid-February. taxpayer’s name or tax identification number. You can get a free copy by calling 1–800–829–3676 or

• We sometimes record telephone calls to evaluate visiting the IRS web site at www.irs.gov.

IRS assistors objectively. We hold these recordings

no longer than one week and use them only to mea- Comments on IRS enforcement actions. The Small

sure the quality of assistance. Business and Agriculture Regulatory Enforcement

Ombudsman and 10 Regional Fairness Boards were es- • We value our customers’ opinions. Throughout this tablished to receive comments from small business about year, we will be surveying our customers for their federal agency enforcement actions. The Ombudsman will opinions on our service. annually evaluate the enforcement activities of each

agency and rate its responsiveness to small business. If

Walk-in. You can walk in to many post offices, you wish to comment on the enforcement actions of the

libraries, and IRS offices to pick up certain forms, IRS, you can:

instructions, and publications. Some IRS offices, • Call 1–888–REG–FAIR (1–888–734–3247), libraries, grocery stores, copy centers, city and county

governments, credit unions, and office supply stores have • Send an e-mail to ombudsman@sba.gov, or

an extensive collection of products available to print from a • Download the appraisal form at www.sba.gov/ CD-ROM or photocopy from reproducible proofs. Also, ombudsman. some IRS offices and libraries have the Internal Revenue

Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Small Business Administration

Mail. You can send your order for forms, instruc- The Small Business Administration (SBA) offers training tions, and publications to the Distribution Center and educational programs, counseling services, financial nearest to you and receive a response within 10 programs, and contract assistance for small business own- workdays after your request is received. Find the address ers. The SBA also has publications and videos on a variety that applies to your part of the country. of business topics. The following briefly describes assis-

• Western part of U.S.: tance provided by the SBA.

Western Area Distribution Center

Small Business Development Centers (SBDCs). Rancho Cordova, CA 95743–0001 SBDCs provide counseling, training, and technical ser- • Central part of U.S.: vices to current and prospective small business owners

Central Area Distribution Center who cannot afford the services of a private consultant.

P.O. Box 8903 Help is available when beginning, improving, or expanding

Bloomington, IL 61702–8903 a small business.

Page 24
Business Information Centers (BICs). BICs offer a Other Federal Agencies small business reference library, management video

tapes, and computer technology to help plan a business. Other federal agencies also publish publications and pamBICs also offer one-on-one assistance. Individuals who phlets to assist small businesses. Most of these are availare in business or are interested in starting a business can able from the Superintendant of Documents at the

use BICs as often as they wish at no charge. Government Printing Office. You can get information and

order these publications and pamphlets in several ways. Service Corps of Retired Executives (SCORE).

SCORE provides small business counseling and training Personal computer. With your personal comto current and prospective small business owners. SCORE puter and modem, you can access the GPO on

is made up of current and former business people who the Internet at www.access.gpo.gov.

offer their expertise and knowledge to help people start,

manage, and expand a small business. SCORE also offers Phone. Call the GPO at 1–202–512–1800. This a variety of small business workshops. is not a toll-free call.

Personal computer. With your personal computer and modem, you can access the SBA on

the Internet at www.sba.gov. While visiting the Mail. Write to the GPO at the following address.

SBA web site, you can find a variety of information of

interest to small business owners.

Phone. Call the SBA Answer Desk at 1–800– Superintendent of Documents

UASK-SBA (1–800–827–5722) for general in- U.S. Government Printing Office

formation about programs available to assist P.O. Box 371954

small business owners. Pittsburgh, PA 15250–7954

Walk-in. You can walk in to a Small Business

Development Center or Business Information

Center to request assistance with your small

business. To find the location nearest you, access the SBA

on the Internet or call the SBA Answer Desk.

Page 25
Index

A R 730 . . . . . . . . . . . . . . . . . . . . . . . 7

Accounting method: Recordkeeping 8109 ......................8 . . . . . . . . . . . . . . . 10

Accrual method ..............4 8300 ......................8 Records, how long to keep . . . . . . 14

Cash method ...............4 8829 . . . . . . . . . . . . . . . . . . . . . 10

I–9 .......................7 Assistance (See Tax help) S SS–4 .....................3

W S corporation .................3 –2 . . . . . . . . . . . . . . . . . . . . 7, 8 B W Self-employment tax ............5 –4 ......................7

Business: W–5 ......................7 Small Business Administration . . . 24

Expenses ..................9 W–9 ......................4 Social security tax .............6

Start-up costs ...............9 Free tax services . . . . . . . . . . . . . 17 Sole proprietorship .............2

Tax kit . . . . . . . . . . . . . . . . . . . . 17 FUTA tax ....................7 Start-up costs .................9 Use of car . . . . . . . . . . . . . . . . . 10 Suggestions ..................1 Use of home ................9

H

Help (See Tax help) T C

Help from Small Business Tax help . . . . . . . . . . . . . . . . . . . . 17 Car and truck expenses . . . . . . . . 10 Administration . . . . . . . . . . . . . . 24 Tax year .....................4 Comments ...................1 Taxes: Corporation ..................3 I Employment ................6

Estimated ..................5 Identification numbers ..........3 D Excise .....................7 Income tax . . . . . . . . . . . . . . . . . 5, 6 Depositing taxes ...............8 How to deposit ..............8 Information returns .............8 Depreciation ..................9 Income ....................5 Inventories ...................4 Self-employment .............5

E Unemployment (FUTA) ........7

Employer identification number L Taxpayer Advocate . . . . . . . . . . . . 17

Limited liability company .........3 (EIN) ......................3 TTY/TDD information . . . . . . . . . . 17

Employment taxes:

Defined ....................6 M U

Records to keep . . . . . . . . . . . . 12 Medicare tax ..................6 Unemployment (FUTA) tax,

Estimated tax .................5 More information (See Tax help) federal ....................7

Excise taxes ..................7

O Y

F Office in home ................9 Your business tax kit . . . . . . . . . . 17

Form:

1099–MISC ................8 P ■

11–C .....................7 Partnership ...................3

1128 ......................4 Penalties ....................8

2290 ......................7 Publications (See Tax help) 720 . . . . . . . . . . . . . . . . . . . . . . . 7

Page 26
Tax Publications for Business Taxpayers

General Guides

Commonly Used Tax Forms

Spanish Language Publications

Your Rights as a Taxpayer

Your Federal Income Tax (For

Individuals)

Farmer’s Tax Guide

Tax Guide for Small Business (For

Individuals Who Use Schedule C or

C-EZ)

Tax Calendars for 2002

Highlights of 2001 Tax Changes

Guide to Free Tax Services

Circular E, Employer’s Tax Guide

Employer’s Supplemental Tax Guide

Circular A, Agricultural Employer’s

Tax Guide

Circular SS, Federal Tax Guide For

Employers in the U.S. Virgin Islands,

Guam, American Samoa, and the

Commonwealth of the Northern

Mariana Islands

Household Employer’s Tax Guide

Circular PR Guía Contributiva

Federal Para Patronos

Puertorriqueños

Travel, Entertainment, Gift, and Car

Expenses

Tax Withholding and Estimated Tax

Excise Taxes for 2002

Withholding of Tax on Nonresident

Aliens and Foreign Entities

Social Security and Other

Information for Members of the

Clergy and Religious Workers

Residential Rental Property

Self-Employment Tax

Depreciating Property Placed in

Service Before 1987

Business Expenses

Net Operating Losses (NOLs) for

Individuals, Estates, and Trusts

Installment Sales

Accounting Periods and Methods

Corporations

Sales and Other Dispositions of

Assets

Basis of Assets

Examination of Returns, Appeal

Rights, and Claims for Refund

Retirement Plans for Small Business

(SEP, SIMPLE, and Qualified Plans)

Determining the Value of Donated

Property

Starting a Business and Keeping

Records

The IRS Collection Process

Information on the United StatesCanada Income Tax Treaty

Bankruptcy Tax Guide

Direct Sellers

Passive Activity and At-Risk Rules

How To Depreciate Property

Reporting Cash Payments of Over

$10,000

The Taxpayer Advocate Service of

the IRS

Derechos del Contribuyente

Cómo Preparar la Declaración de

Impuesto Federal

English-Spanish Glossary of Words

and Phrases Used in Publications

Issued by the Internal Revenue

Service

Tax on Unrelated Business Income

of Exempt Organizations

Wage and Tax Statement

Itemized Deductions & Interest and

Ordinary Dividends*

Profit or Loss From Business*

Net Profit From Business*

Capital Gains and Losses*

Supplemental Income and Loss*

Profit or Loss From Farming*

Credit for the Elderly or the Disabled*

Estimated Tax for Individuals*

Self-Employment Tax*

Amended U.S. Individual Income Tax Return*

Capital Gains and Losses

Partner’s Share of Income,

Credits, Deductions, etc.

U.S. Corporation Income Tax Return

U.S. Income Tax Return for an S Corporation

Employee Business Expenses*

Unreimbursed Employee Business

Expenses*

Power of Attorney and Declaration of

Representative*

Child and Dependent Care Expenses*

General Business Credit

Application for Automatic Extension of Time To

File U.S. Individual Income Tax Return*

Moving Expenses*

Additional Taxes on Qualified Plans (Including

IRAs) and Other Tax-Favored Accounts

Installment Sale Income*

Noncash Charitable Contributions*

Change of Address*

Expenses for Business Use of Your Home*

Tax Highlights for Commercial

Fishermen

910

595

553

509

334

225

17

1

Nondeductible IRAs*

Passive Activity Loss Limitations*

15

15-A

51

80

179

926

378

463

505

510

515

517

527

533

534

535

536

537

541

538

542

Partnerships

544

551

556

560

561

583

594

597

598

901

911

925

946

947

908

1544

1546

1SP

850

579SP

594SP Comprendiendo el Proceso de Cobro

10134

Sch A & B

Sch C

Sch C-EZ

Sch D

Sch E

Sch F

Sch H Household Employment Taxes*

Sch R

Sch SE

1040-ES

1040X

Sch D

Sch K-1

1120

1120S

1065 U.S. Return of Partnership Income

2106

2106-EZ

2441

2848

3800

4868

3903

5329

6252

8283

8582

8606

8822

8829

Specialized Publications

Fuel Tax Credits and Refunds

W-4 Employee’s Withholding Allowance Certificate*

Employer’s Annual Federal Unemployment

(FUTA) Tax Return*

940

940-EZ

1040 U.S. Individual Income Tax Return*

Employer’s Annual Federal Unemployment

(FUTA) Tax Return*

Business Use of Your Home

(Including Use by Day-Care

Providers)

587

U.S. Tax Treaties

Practice Before the IRS and Power

of Attorney

Tax Incentives for Empowerment

Zones and Other Distressed

Communities

Employer’s Guides

Certification for Reduced Tax Rates

in Tax Treaty Countries

686

954

Capital Gains and Losses and Built-In Gains

Shareholder’s Share of Income, Credits,

Deductions, etc.

Sch D

Sch K-1

Underpayment of Estimated Tax by

Individuals, Estates, and Trusts*

2210

Report of Cash Payments Over $10,000

Received in a Trade or Business*

8300

4562 Depreciation and Amortization*

4797 Sales of Business Property*

Informe de Pagos en Efectivo en

Exceso de $10,000 (Recibidos en

una Ocupación o Negocio)

1544SP

U.S. Corporation Short-Form

Income Tax Return

1120-A

See How To Get Tax Help for a variety of ways to get publications, including by

computer, phone, and mail.

See How To Get Tax Help for a variety of ways to get forms, including by computer, fax, phone,

and mail. Items with an asterisk are available by fax. For these orders only, use the catalog number

when ordering.

Form Number and Title

Catalog

Number

W-2

10220

11234

10983

17001

11320

11330

11334

14374

11338

11344

11346

12187

11358

11340

11360

941 Employer’s Quarterly Federal Tax Return

11359

Sch J Farm Income Averaging* 25513

11510

Catalog

Number

20604

11744

11862

11980

12392

12490

12906

13086

13141

13329

13601

62299

63966

12081

13232

63704

62133 11390

11393

11394

11450

11456

11700

11520

11516

Form Number and Title

Sch D-1 Continuation Sheet for Schedule D 10424

Employer’s Tax Guide to Fringe

Benefits

15-B

Page 27