While basic tax deductions gen
. erally remain the same from tax return
to tax return, rules do differ
slightly from year to year. Items like
the standard deduction and amounts
for dependents are two examples.
Understanding the "rules" and having
the records necessary to verify
your expenditures are the keys to correct
payment. Books are available
usually around the first of November
that discuss the upcoming tax structure.
And after January 1, the best
source of information and explanation p is
th^e Internal Revenue Service. You
can contact your local office or check
the telephone directory or informs
uon ior tne WATS number. But, in
both of these cases, you must have
the facts at hand, the all-important
records, in order to explain your question
so that you can get the assistance
you require. In addition, a vast store
of information is available at your
public library or book store.
Good record keeping is the most
important aspect of accurate tax paying.
That kind of planning must start
before the actual calendar year com
mencea. There are many types of record
keeping systems that you can buy
at an office supply store, local dime
store or discount store, as well as at
the drug store. Don't let the word
"system" confuse you. It merely refers
to a "way" to keep accurate accounts
of what you spend, why and
where. It's a good idea to check out
as manv SVStimn ?? vnu ran hafnr?
you buy anything to make sure that
the method you chbbse^witl fit your
needs.?~
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Records for income tax deductions
can be any number of things: a cancelled
check or even a check stub;,
a cash register tape; a hand-written
receipt; a stub from a restaurant bill;
a ticket from a toll bridge; tfie remains
of an airline ticket; anything
*that will verify the amount spent and
on what date can be used as a record.
This is especially important if you
own your own business.
Records should be keot either bv
the month or by categories. If you
choose a book, like a small ledger
book, you can title each page and
write down the amounts under each
heading, again either by the month
or by the category. If you select the
category method, your year end compilation
will be greatly simplified because
all the figures for each major
group will be in one place and all
you have to do is total them. The
monthly system, however, can be
important insofar at setting up a budget
and seeing exactly how much you
spend on what for your family's needs
or for your business. Another adaptation
of the record keeping system is
using a file folder for each month or
each category. If the ends are closed,
vou merelv Hmn Kill nr in?A
* ~ """w" ,,,VV
the folder (car expense, medical, dental,
business expense, etc.).
Keep receipts for everything and
note on the back of each one the date
(if it doesn't appear on the receipt)
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ibscription To !
lem Chronicle j
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7 Kjqrxfqicic
524 f"
uary 29, 1981
I
1
5>
f
The Chroi
Planning a 1
That Really
as well as what it was for. Another
good idea is to indicate, if possible,
the particular tax deduction category
you intend to put the receipt in. Then
it's a simple matter of sorting when
you are ready to figure your taxes.
And simplicity of record keeping is
really the name of the game.
.Besides, the record keeping sys
tern, a calculator or adding machine
is a great time saver. And. both of
them are accurate, more accurate
than the human process of addition
^ _ -J <-< *
auu suundLiiun. uareiui snopping
will also minimize the cost to you.
Now armed with records and information
on new tax laws and a reliable
adding device, you're ready to eliminate
the income tax problem.
Here are just a few things to keep
in mind that might apply to your
particular tax situation.
ILyou are a working parent, with
a family income of less than $35,000
per year, a deduction is available for
Child care outside your home or inside
your home. Here again, it might
be wise to check into this aspect of
your taxes before you make a decision
about where you will have your children
cared for should you require
outside care for them. If you pay
someone in your home and you pay
that individual more than $50.00 per y
quarter, in order to take the deduction,
you must also pay social security
for th?m
Earned income credit is another
rarely used item. Explanation is always
located in the front of the tax
booklet you receive every year. In
"essence, it applies to incomes or less
Let us take the
TAXI
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B^iflSIH^Ri )1 Bfiffll. e
BPPfi
accounting &
1510 B. Martin St.
(Corner Si/as Creek Parkway)
licle, Saturday, January 31, 1981-Page 7
lax Return
Pays Off
than $8,000 and results in some cases
in a negative income tax.
Medical expenses can mean a large 4
deduction, too. Keep track of the
mileage to and from the doctors office
especially if the office is located in
a town other than the one in which
you live. It could be a deduction.
Also medical insurance is deducted
in two separate places.
Charitable gifts is another category
to pay special attention to. A donation
to a service organization even in
the form of clothing can be deductible
IF you obtain a receipt.
Making gifts of money to relatives
within a given tax year is an area
that has had some drastic changes
in the last few years. Finding out
about them and planning accordingly ? ?.
could save you hundreds of dollars
in gift tax expense.
Income averaging is a useful technique
when you have a sudden burst
of income. It allows - you to spread
the impact over a five-year period,
obviously reducing your taxes in that
"burst" year.
Homestead exemptions, capital
gains ad van tages^ccilingpayment on ?^?
social security taxes, deduction of
office expenses or partial application
oi utilities and mortgage payments
rf-your business is located in your
home, the installation of air conditioning
if it is prescribed in writing
by a physician, all can be used to
your advantage if you are aware that
these types of things have a meaningful
relationship to the taxes that you
See Page 8
i worry out of
TME!
-et's face it, tax forms are com>licated.
All those tables and
leductions can lead to one big
ness if you don't fully undersand
the tax laws. But don't
rwny,..wc miuw taxes, see us
nd relax. We'll make sure youi
et every deduction you're entitld
to so you won't pay more than _
ecessary. Sit down with our tax
xperts and let us do the work.
tax service
Ph: 722-7956