Chicago Accounting News
How long to keep medical receipts is equal to how long IRS will go back when you are audited. Hold on to your medical receipts for 7 to 10 years. This is the period where the IRS will go back in case you are audited. Medical receipts are the proof of payment for the deductions you made under the medical expenses. In the case of dispute, you are obligated to provide these medical receipts as proof.
What kind of medical receipts you have to maintain
Medical bills, cancelled checks, unreimbursed medical expense (if you made the deduction on your return) and credit card statements. It’s just not medical receipts; it also includes bills related to dental, eye, hearing aids. Also hold on to your pharmacy bills, any over-the-counter medications or out-of-pocket expenses.
How is sales tax calculated on a new car varies from state to state, city to city and county to county. States like Alaska, Montana, New Hampshire, Delaware and Oregon do not charge sales taxes. Each state has its own way of determining a car’s taxable price.
1) The car sales tax will vary based on the state and the total purchase price of the car. You can refer to your local finance department website to understand the sales tax rate for your state.
2) Deduct dealer financing fees, manufacturer’s discounts, warranty payments and any other processing fees. These are the ones that you don’t need to pay the taxes.
3) Itemize all the expenses including any transfer fees.
4) Add all those expenses for which you have to pay the tax — the title transfer, insurance and new license plate processing fees.
5) In order to obtain the sales tax fee, multiply the sales tax rate percentage by the price of your new car.
How long are you required to keep tax documentation depends how long IRS will go back if you are audited. Usually, you must keep your documents that support an item of income or deductions on a tax return before the duration of limitations for that return expires.
The period of restrictions is the period in which you may modify your own tax return to claim a credit or even refund, or the Internal revenue service can assess extra tax.
The below information contains the intervals associated with restrictions that affect tax returns. Unless otherwise mentioned, duration makes reference to the period after the return was filed. Returns submitted prior to the deadline tend to be handled as submitted on the due date.
Keep duplicates of your filed tax returns. This will help you in planning future tax returns as well as doing calculations if you file an amended return.
1) You owe extra tax and situations (2), (3), and (4), below, do not apply to you; keep documents for three years.
2) You do not report income that you ought to report, and it is greater than 25% of the gross income shown on your return; keep documents for 6 years.
3) If you file a fraudulent return; maintain information indefinitely.
4) If you don’t file a return; keep documentation forever.
5) You file claims with regard to credit or refund after you file your own returns; keep documentation for 3 years from the date you filed your original return or 24 months from the date you paid the taxes, whichever is later.
6) If you claim for any loss through useless investments or even bad debt deductions; keep records for about 7 years.
7) Maintain all employment tax information not less than four years after the day that the taxes become due or is paid, whichever is later.
The next questions should be applied to each record while you determine whether to have a record or throw it away.
Is the document connected to assets?
Maintain records associated with the property until the period of restrictions expires for the year in which you dispose of the property inside a taxable temperament. You must keep this info to find any depreciation, amortization, or even depletion deductions and also to figure the actual gain or loss when you market or else get rid of the home.
Usually, should you receive property in a nontaxable exchange, your foundation in that rentals is the same as the basis of the property a person gave up, elevated by any cash you paid. You must keep the information on the old home, as well as on the new property, before the period of restrictions expires for the 12 months that you dispose of the new home in a taxable disposition.
Exactly what should I do with my personal records with regard to nontax reasons?
When your records aren’t needed for tax reasons, do not discard all of them until you check to see if you need to keep them longer for other reasons. For example, your own insurance company or creditors may require you to keep them longer than the IRS will.
You can avoid penalties for the undisclosed business tax by voluntarily disclosing and paying/remitting the tax and non-tax debts. You are not eligible for this program if you are under the audit or investigation.
The intention of the department to resolve the undisclosed tax is as follows,
Pursuant to Section 3-4-265 of the Municipal Code of Chicago, Business Taxpayers Assistance Ordinance, taxpayers and tax collectors may disclose any taxes, fees or surcharges due the City, provided certain minimal qualifications are met. The program is designed to encourage self-compliance by allowing taxpayers and tax collectors an opportunity to resolve undisclosed tax and certain non-tax debts without penalty.
Thanks to city for providing an option to avoid penalties. Below are the options stated by the city regarding the taxpayer & tax collector duties related to voluntary disclosure.
Under this program a taxpayer or tax collector must calculate and remit the amounts due for any of the tax or non-tax debts that are to be paid or remitted to the Department of Finance. The discloser must determine the amount it owes for the four-year period immediately prior to the date on which it applies to participate in the program. The discloser must remit, or enter a payment agreement to pay, the full amount of tax and interest it computes to be due. The discloser must also register with the Department and pay all previous deficiencies and/or delinquencies that may have existed before its disclosure. The discloser waives its right to an administrative hearing and to claims for refund or credit, and agrees not to initiate or join any lawsuits for the payments made under the program.
What you get in turn for voluntary disclosure from the department? The department obligations and duties are as follows.
In exchange for voluntarily disclosing and paying or remitting the tax and non-tax debts, the Department agrees to waive all penalties that would otherwise apply. The Department also agrees not to assess the discloser for periods prior to the disclosed four-year period for the taxes disclosed. Should the Department subsequently audit the discloser for the periods, and less than a 10% tax variation is determined in what the discloser remitted as the tax due, the discloser will be liable for the full amount of tax, late penalty and interest due on the additional amount determined. Moreover, if said tax variation is 10% or more, the Department may revoke the terms and conditions of the agreement, assess all applicable penalties, and extend the audit to include all periods open under the statute of limitations.
You must qualify for the voluntary disclosure program. The recommendation from city of Chicago in order to be considered as the qualified discloser is stated as below.
To qualify for this program, a discloser must not be under audit or investigation. If a discloser has received a written notice relating to an audit or investigation for a tax or taxes, it is prohibited from participating in the program for those taxes. The discloser must also warrant that the taxes being disclosed are not the subject of an audit or investigation by the Department involving a person or entity involved in a prior bulk sale with the discloser, and also that it has not received a Delinquency Notice with respect to the disclosed taxes. The discloser cannot disclose for the tax and period for which it has been issued a Deficiency Notice by the City, but must pay such amounts as part of its disclosure for other periods or taxes.
Are you ready to get started? Apply for the voluntary disclosure program