All About Personal Accounting
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All About Personal Accounting. If you have a checking account, of course you balance it periodically to account for any differences between what's in your statement and what you wrote down for checks and deposits.
Many people do it
once a month when their statement is mailed to them, but with the advent of
online banking, you can do it daily if you're the sort whose banking tends to
get away from them.
You balance your
checkbook to note any charges in your checking account that you haven't
recorded in your checkbook. Some of these can include ATM fees, overdraft fees,
special transaction fees or low balance fees, if you're required to keep a
minimum balance in your account.
You also balance
your checkbook to record any credits that you haven't noted previously. They
might include automatic deposits, or refunds or other electronic deposits. Your
checking account might be an interest-bearing account and you want to record
any interest that it's earned.
You also need to
discover if you've made any errors in your recordkeeping or if the bank has
made any errors.
Another form of accounting that we all dread is the filing of annual federal income tax returns. Many people use a CPA to do their returns; others do it themselves. All About Personal Accounting.
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Most forms include the following items:
Income:
Any money you've
earned from working or owning assets, unless there are specific exemptions from
income tax.
Personal Exemptions:
This is a certain
amount of income that is excused from tax.
Standard Deduction:
Some personal
expenditures or business expenses can be deducted from your income to reduce
the taxable amount of income. These expenses include items such as interest
paid on your home mortgage, charitable contributions and property taxes.
Taxable Income:
This is the
balance of income that's subject to taxes after personal exemptions and
deductions are factored in.(*)