Taxing Matters

Taxing Matters by Justin G. Wade, E.A. Accountant 783 Madison M., Suite 208-B (703)825-6670 Culpeper, Va. 22701 Preparing For Your 1987 Tax Ratum Filing Year-round recordkeeping is essential to filing a correct tax return, especially in view or the changes in the tax laws. The following are some areas that require special attention and some ways you get ready for filing your return for 1987. Keep records of all interest, including tax-exempt interest, which must now be reported on your tax return. Obtain Social Security numbers for your children who will be five years old before the ond of 1987. You need to file a SS-5 Form to get this number. Keep careful records of income and expenses if you have rental property. You wifi need separate records if you have vacation property that you rent as opposed to ordinary rental property you may own. If you own a business, be sure to keep separate bank accounts for this. This was always important, but under the new rules, it is even more important. Keep separate records for the different types of interest payments as different deduction rotes apply to various types of interest. 1 Business interest is still fully deductible. 2. Investment interest is deductible only to the extent of investment income, subject to a phase-in rule. 3. Personal Interest is 65% deductible in 1987 and phases out over 4 years. 4. “Passive activity" interest is deductible only against “passive activity" income attain subject to a phase-in rule. • Keep separate records of income or loss from "passive" vs. "active" investments in S-corporations, partnerships and real estate ventures as different loss rules apply to this type of investment. Be sure to keep records of any home improvement or remodeling as interest on a home mortgage or home equity loan is only deductible up to the cost of the home plus improvements; with certain exceptions. Accounting, Tax Services, Consulting Enrolled To Practice Before The Internal Rrrenue Service