RECEIPTS FOR BUSINESS EXPENSES

One of my clients just went through an audit of their unincorporated business expenses (schedule C). The IRS threw out all of the expenses since my client didn't keep receipts. We had check copies but that was not enough. To avoid this same dismal result, make sure you keep all receipts for business expenses for at least the last three years which are open under the statute of limitations. It is a good idea to staple the check voucher to the invoice or receipt and keep in a folder by year. If you don't use check vouchers write the date and number of the check on the paid invoice. Also when I do your tax return, I just want the summarized amounts for the year and not the receipts.

Estate Tax Exclusion Portability Between Spouses

A surviving spouse gets to add the unused amount of the estate and gift tax exclusion of the first spouse to die to their estate tax exclusion. The current amount of the estate tax exclusion is $5,490,000. The only kicker is that an estate tax return has to be filed for the spouse that died to add the unused amount of the exclusion to the surviving spouse. For example Tom dies in 2017 with a gross estate of $3 million which includes appreciating real estate. The executor files an estate tax return even though no estate tax is due to allow Tom's wife Emily to add the unused exclusion amount of $2,490,000 making her exclusion $7,980,000. This may protect Emily's estate from paying any estate taxes when she dies because of the appreciating real estate.