MARCH 2016
Khaas Baat : A Publication for Indian Americans in Florida




February is an important month for tax filings. By Jan. 31, most of the tax documents would have been received by the taxpayers. A good record keeping makes the tax filing helpful, easier and less frustrating. Also, it enables to explain and document any item on the return the IRS or other tax agencies might question, and could prevent you from having to pay additional taxes and penalties for unsubstantiated items. Especially, business tax payers have a need to keep elaborate supporting documents substantiating income and expenses.

Below are some record-keeping tips and documents that may help with your tax filings:

1099-Misc: Non-employee compensation, rental income, royalties, other income;

1099-B: Proceeds from brokers – stock and securities transactions;

1099-C: Cancelled debts;

1099-DIV: Dividends – qualified dividends have a lower tax rate;

1099-INT: Interest – Interest on investments including bank interest, CD/money market;

1099-G: Government refunds or payments;

1099-Q: Education account distributions;

1099-R: Pension and IRA distributions;

1099-T: Tuition fees paid.

With modern and latest technologies, most receipts can be saved and preserved electronically.

Many tax-related transactions are done through banks and credit cards. In such cases, it may be a good idea to save the statements, including canceled checks. For business tax filers, bank and credit card statements are critical to report proper income and expenses.

Other Important Tax issues

Reporting Specified Foreign Financial Assets (Form 8938)

Unless an exception applies, you must file Form 8938 if you are a specified individual that has an interest in specified foreign financial assets and the value of those assets is more than the applicable reporting threshold.

FBAR (Report of Foreign bank and financial accounts)

You may have to file FBAR if you had a financial interest in or signature authority over at least one financial account located outside of the United States; and the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported.

The FBAR is a calendar year report and must be filed on or before June 30 of the year following the calendar year (June 30, 2016) being reported. FBAR must be filed electronically through FinCEN’s BSA E-Filing System.

There are various limitations, thresholds and procedures for many of the deduction and filings. Please consult your CPA/Tax attorney/or tax consultant for proper guidance with the above subject matter.

In accordance with IRS Circular 230, the above information is not intended or written to be used, and cannot be used as or considered a "covered opinion" or other written tax advice and should not be relied upon for the purpose of avoiding tax-related penalties under the Internal Revenue Code; promoting, marketing, or recommending to another party any transaction or tax-related matter(s) addressed herein; for IRS audit, tax dispute or other purposes.

Suresh Kumar, CPA, MBA is the Principal of Kumar Consulting, PA, a CPA & Consulting firm licensed in the states of FL, KS and MO and maybe reached at (813) 421-5068 or [email protected]/

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