Additional documentation is also required when a home-based business owner keeps his or her children, spouse, or other relatives on staff in order to claim their wages as a tax-deductible company expense. For record, always pay every staff member by check and have each person keep a written record of their work, including total number of hours, date of work, and type of activity accomplished. In addition, you should also request a written estimate from a professional for same services. For instance, if your spouse maintains your company's web site, you need to find what a professional Webmaster charges in order to substantiate your spouse's salary.

Besides keeping track of expenses, income, and wages, you must also have proof that your company intended to produce a profit. A business plan can serve as evidence that you are serious about generating revenue with your company. The plan will also provide written documentation of expenses you plan to incur and will help keep you organized.

Overall, best way to ease your concern over an audit is through preparation. By keeping records and documentation on everything, you'll have nothing to fear if you are one of .5% of taxpayers selected for an audit.

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Home Buyers If you purchased a home in 2002, you may be entitled to deduct mortgage points paid by seller. There is one catch, though—you have to reduce tax basis of your new home by amount of seller-paid points that you deduct. Also ask your tax professional about "qualified residence interest." If you sold a house last year, you might have prepaid some of property taxes that came due after sale. You can deduct this amount on your return as well.

Charity Don't overlook charitable donations. If you're a contributor, keep you receipts and claim them on your tax return. Many people don't realize that charitable donation receipts are good for up to five years, so if you missed them last time, it's not too late.

The April 15th deadline is fast approaching. Here's our most valuable tip: Ask Questions. If you have questions about your tax return, visit T.I.P.S. website at http://www.ccra-adrc.gc.ca/eservices ipsonline/menu-e.html or call1-800-959-8281.

This article was published in March edition of Sophia's Royal Report: http://www.sophiainguelph.com/