Doing Taxes The Right Way

Enhancing Estate Tax Compliance

All charges that a government organization imposes on an individual or legal entity to help in funding various public expenditures are referred to as tax. There are punishments enforceable by law for failure to pay tax, resisting or evading tax. Money or labour equivalent can be used in paying taxes imposed directly or indirectly the government in a given state. Recording all financial transactions by an individual or legal entity is important in ensuring efficiency while filing tax returns. Bookkeeping will, therefore, ensure that all daily financial transactions are recorded.

Businesses, institutions and organizations carry out various business transaction on daily basis which requires recording that is usually done through bookkeeping which is a business accounting process. Financial transactions in an organizations which can be done either on cash or credit basis are several and may include purchases, sales, payments, and receipts. Book keeping in businesses and organizations is done through two major systems namely the single-entry bookkeeping system and double-entry bookkeeping system. Recording of financial transactions of incomes and expenses in organizations or businesses are done on one account in single-entry bookkeeping system. Recording of financial transactions in at least two accounts such as liabilities, assets, expenses and revenue account is done when working with the double-entry bookkeeping systems. Bookkeeping can be computerized hence reducing the paper work and also ensuring accuracy in the various entries for financial transactions in a businesses or organization.

Taxes imposed usually vary depending on the income levels, one’s property, goods, and services one purchases and other types likely to be imposed. An example of tax imposed depending on one’s property is the estate tax. An individual who inherits property from a diseased person upon their death is likely to be charged some tax on the property referred to an estate tax. The estate tax can only be imposed on the beneficiary or the heir if the value exceed a set limited by the law of the state. Estate tax preparation depends limit set for the estate tax and also the procedure to be followed in filling the estate tax if the maximum limit set have been exceeded.

Enrolled agents who have knowledge and are qualified in tax law can help in estate tax preparation. The enrolled agent helps in ensuring the amount of estate tax one is charged is minimized while ensuring that compliance with the law is maintained. Financial statements may present some estate tax information hence it is necessary for enrolled agents to have knowledge in accounting practices. Opinions that do not present the actual financial situation can arise when enrolled agents perform accounting and audit tasks hence are restricted.

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