YEAR-END TAX PREPARATION GUIDE

Dec 20: Do a projection of 1996 profit and expected income taxes for use in adjusting 4th quarter estimated tax payments and tax planning moves.

Dec 31: Pay 4th quarter State estimated taxes if helpful in reducing 1996 taxes.

Dec 31: Pay any other tax deductible bills due in January if accelerating deductions for tax planning.

Dec 31: Note ending odometer readings for all vehicles used for business.

Dec 31: Take year-end inventory, remember items out on consignment.

Jan 4: Make appointment with tax return preparer. Aim for before January 15 if help is needed in adjusting 4th quarter Federal estimated tax payment.

Jan 15: 4th quarter Federal and State estimated tax payments due today.

Jan 15: Record cash out-of-pocket expenses in appropriate expense categories - include tolls & parking, supplies, meals, pay phones.

Jan 15: Review December credit business card statement for 1996 charges that could be deductible for 1996 even if not paid until 1997.

Jan 15: Complete 1996 business bookkeeping - prepare a summary list of category totals for all money received (cash receipts) and for all expenses paid (cash disbursements).

Jan 15: Cost out the ending inventory. If using FIFO method, refer to most recent invoices for pricing items on hand and work backwards until all costs have been determined. Multiply item counts by prices to get cost of ending inventory.

Jan 15: Calculate the cost of inventory you took out during the year for personal use or for personal gifts.

Jan 15: If using the accrual method of accounting, get the total for accounts receivable and accounts payable as of 12/31/96. Prepare a list of the payables, identified by expense category.

Jan 15: Separately list insurance expenses by type: employee health insurance, your own (self-employed) health insurance, workers compensation, business liability. Premiums for other owner’s insurance, such as life and disability, are not deductible.

Jan 15: Determine whether education expenses are deductible. If so, include mileage and other travel expenses for education with other business mileage and travel expenses.

Jan 15: For the Fuel Tax Credit: calculate the gallons of gasoline, gasohol, or undyed diesel fuel you used for off-road business use.

Jan 15: Review professional dues paid in 1996 and look for notification of any amount not deductible because it may be allocable to the organization’s lobbying activities.

Jan 15: Prepare a list of furnishings and equipment purchased; include acquisition date, description, total cost (including sales tax), and amount financed, if any.

Jan 15: For business loans payable, prepare a summary showing total interest paid, total principal paid and remaining principal balance. Include year-end statement from lender or amortization schedule, if available.

Jan 15: Review business gifts included in expenses. Identify any gifts that exceed $25 per person per year; the excess over $25 is not deductible.

Jan 15: Tally deductible mileage: business, medical, charitable\volunteer.Jan 15Prepare a summary of business auto information for each vehicle including: total miles driven, business miles, an estimate of commuting mileage, cost of the vehicle and date first used for business.

Jan 15: To check the actual method for business auto expense, prepare a summary of operating costs including: gas, repairs, insurance, registration, car washes, auto club dues, and lease payments (if leased).

Jan 15: Check your auto registration slip and record the excise tax or personal property tax paid as part of the annual registration.

Jan 15: Review miscellaneous expense category and prepare a summary of payments with descriptions of what the payments were for.

Jan 15: Identify the amount you paid for tax return preparation in 1996 and how it should be allocated between business and personal; note separately how much of this expense has already been included in the business expenses.

Jan 31: Complete and file all necessary State sales tax forms.

Jan 31: Send out Forms 1099-MISC to subcontractors or landlords who received more than $600 from your business; send Forms 1099-MISC and Form 1096 to IRS.

Feb: Gather all pertinent IRS information reporting forms: