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Taxes on Individuals & Families

Chances are you're a little confused about what to keep and what to throw away when it comes to tax and financial records. No worries. It's time to sort through what you've got and keep only the important stuff. Here's what to keep in mind:

Keep records that directly support income and expense items on your tax return. For income, this includes W-2s, 1099s and K-1s. Also keep records of any other income you might have received from other sources. It's also a good idea to save your bank statements and investment statements from brokers.

The IRS can audit you within three years after you file your return. But in cases where income is underreported, they can audit for up to six years. To be safe, keep your tax records for seven years.

  • Alot goes through your mind during a divorce.  A Divorce can be an emotionally draining process.  One often overlooked area is taxes.  If you are in the middle of a divorce or just thinking about it, you need to be careful.  Divorce has serious tax implications, and the choices you make now may affect you for many years.

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    If you were unfortunately the victim if a fire, flood, or tornado. and your home, vehicle, or other personal property is damaged or destroyed by a sudden, unexpected casualty, an itemized tax deduction may help ease the financial burden.

  • Who have you designated as beneficiaries for your insurance policies and retirement accounts? If you can't remember, you're not alone. But it's worth checking.  If you make the wrong decision, it could affect who inherits those assets.

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    Did you hire a handyman, housekeepr, gardner or nanny or some other individual to work for you this year?  If these individuals don't do work for other people and you paid them more than $1,800 in 2013, you may have a payroll tax obligation.  This tax obligation is commonly called the nanny tax.

  •  Selling items on eBay and other online auction Web sites has become a very popular way to get rid of unwanted household stuff, as well as a way to turn a little profit. Many users have even started full-time businesses auctioning merchandise on the Web. But like any business venture, selling items in the virtual world has tax implications that are all too real.

  • The Internal Revenue Service has announced that married same-sex couples will be treated just like opposite-sex couples for federal tax purposes provided that they were married in a jurisdiction, domestic or foreign, that recognized their marriage as legal even if they live in a state that does not recognize same-sex marriages as legal.

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By Dugan Lopatka - Accountants for Midsize Businesses in Chicago:  CPAs for Small Businesses

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