Summer tan anyone?

Summer Oh Summer. It's that special season when everyone looks forward to getting to the beach, the pool and maybe getting a tan. Well, if you get a tan via the salon you can look forward to an additional 10% excise tax on that summer glow..... Call it the vanity tax. It goes into effect July 1, 2010.

IRS period of limitations for record keeping

This is taken from publication 552 off the IRS.gov website if you want to read the entire 10 pages of information. This covers basic record keeping and what documents to keep. In a nutshell for tax purposes here are the following period of limitations:

1. If you owe additional taxes and 2,3 & 4 do not apply to you.
Keep your records for 3 years.
It's understandable for this to happen, you owe more than you originally thought.

2. If you do not report income that you should, and it's more than 25% of the gross income shown on your return-
Keep your records for 6 years.
This should not be an issue, since you are reporting all your income, right?

3. If you file a fraudulent return
NO limit.


4. If you don' file a return
NO Limit
If you don't think you made enough money to file, file anyway. Use the 1040 EZ, and you will find out that you don't owe any money. You may even get money back with all the special credits out there.

5. If you file a claim for credit or refund after you filed your return
The later of 3 years or 2 years after tax was paid.

6. If you file a claim for a loss from worthless securities
Keep your records for 7 years.

Financial Spring Cleaning

Should It stay or should It go?

First of all, make sure that any paperwork personal information such as bank account numbers, social security numbers, or other personal identification is shredded before you recyle it.

Monthly Clean Up:
1. ATM, bank deposit slips and credit card receipts after you checked them against the monthly statements.
2. Sales receipts for small purchases, that are not under a warranty.

Annual Clean Up:
1. Monthly bank and credit card statements if you don't itemize deductions.
2. Monthly & Quarterly brokerage and Mutual Fund Statements.
3. Monthly mortgage statements, if you receive a year end statement the totals the amount of interest and property taxes you've paid throughout the year.
4. Phone & utility bills. If you have a home office keep these receipts for business expense records.
5. Paycheck stubs after reconciled with annual W-2 or 1099.

Keep for 7 years:

1. W-2 and 1099 forms

2. Year-end statements from credit card companies.

3. Phone & Utility bills if used for business expense itemizations.

4. Cancelled checks and receipts or statements for:
A. Annual mortgage interest
B. Property Taxes
C. Deductible Business Expenses
D. Child-care bills.
E. Out-0f-pocket Medical costs.
F. All other tax deductible expense.

Keep Indefinitely:

1. Annual Tax Returns

2. Year end summaries from financial services companies.

3. Confirmation slips listing the purchase price of any investments you own.

4. Home improvement records

5. Receipts for major purchases.