Do you keep all your receipts in teeny-tiny shoeboxes?

[Kyung]

Probably not the best filing system. But, hey, at least you have receipts.

Here's a secret. The tax person doesn't really want to see your receipts. Mostly they want to know that you have them. But really, they don't want to see you coming through their door w/ a plastic bag of random receipts.

Basically, they'll sit you down and ask questions. So you should spend some time preparing before your interview w/the tax person.

Documents the tax person will want bec. they'll need to staple it to your copy of the return.
1099-DIV
1099-MISC
1099-INT
W-2 (your spouse's and yours if you worked as an employee for someone during the 2008 year)
Any statements of interest earned from any savings accounts, money market funds, or investments. (I expect we all took a big hit there this year.)

There are probably other documents, but no receipts. They really could care less about receipts. So feel free to leave the shoebox at home.

Now, the homework.

Add up the 1099-MISC documents. Find out exactly how much you earned last year. Then deduct all the parking reimbursement. Don't pay taxes on money that you're being paid as a reimbursement. I've only had one agency deduct out the parking on my 1099s.

Figure out how much you paid for:
scopist (s)
business supplies (paper, ink)
postage/delivery (FedEx, UPS)
copy costs

Figure out how much mileage you used. This number doesn't have to be exact. But come up with a good estimate.
Figure out how much you paid for gas. Know how much you spend on registration and DMV fees. Smog check? Repairs?

Did you buy new software, new laptop, new printer, shredder, or any new equipment? Don't forget to tell your tax person. Did you buy a new car? Are you using it solely for work? Majority for work?

Did you purchase online backup?

Don't forget to list your dues to the CRB in California. Any professional fees, list down.

Did you go to the convention in Anaheim? Write it off.

Home office expenses:
Mortgage (a percentage based on if you have a space solely set aside for court reporting work. The corner of the dining room table does not count.)
Telephone bill
Cell phone
Internet

You can write off the amount you pay your tax preparer. But any tax preparer worth their salt will have that one, I hope.

I'm sure there's tons of other things. Hopefully others will chime in.

But bottom line, be prepared when you see your tax person.

[Kyung]

I use Quicken. I think about switching to Quickbooks, but I like Quicken.

[Paula A. Pyburn, CSR, RPR, CLR]

I started using QuickBooks a few years ago. Entering the data from your checking account and business credit card using QuickBooks on a regular basis is very helpful when the end of the year arrives! The reconcilation is really easy. The problem that I have is that I do not do it every month and it piles up. It's nice to know what you're making all year and what your dedcutions are. You can create lots of different forms, i.e., P&Ls, etc, for yourself or your accountant with just a click. Of course you still need to file those receipts away in their respective folders for backup. Try it!!

[Rhoda Collins]

I created an Excel sheet this year. I entered things as they came in. Created totals that show at the top of the sheet so I saw a running total all year. I hope I don't spend as much this year!! my machine took a chunk, lol.

[Kellie Zollars]

Hi.

I use gallon Ziploc bags, not shoeboxes :)

That's good advice; but to avoid an audit, if you are going to deduct car expenses you need to keep a contemporaneous log of your mileage, gas, etc. Stationery stores sell little books, or you can put it in your DepoBook, calendar, or organizer. You are not supposed to estimate these things for the year. If you forget once and a while to do it, you can estimate by using mapquest or something to get the mileage. After a while you know what the mileage is to your favorite client's office.

You can take a standard per mile rate or a percentage of business use. The accountant should figure out both ways to see which one gives you a bigger deduction. You must use your car more than 50% for business to take depreciation and other deductions though. You need to know how many miles are on your car in January, then in December to be able to figure out your personal and business miles for the year.

Disclaimer: This is very general info. As I am not a CPA, you should not rely on my advice. If you have questions ask your accountant or look at the Internal Revenue Service or franchise tax board websites. There are many publications and forms you can download.

My accountant e-mails me a computer printout with pages of questions to fill out along with a list of forms and statements they need to do my taxes. They use a computer program to prepare my taxes. You are responsible for your tax returns even if the accountant makes a mistake so make sure they have the correct info.

Kellie