Everyone fears the dreaded tax audit – and with good reason. It means that the algorithm scoring formula used by the Internal Revenue Service (IRS) has found what it deems to be an irregularity on your tax return. Few audits turn out well for the individual or small business being questioned and the following are just a few of the ways that people can help mitigate the chance of being audited.

Hire a Professional

Nothing can compare to the personalized service and expertise available with a tax professional. It’s tempting to use online tax software. It’s easy and convenient, but the software may not be able to account for special circumstances and you may be leaving money on the table that could go in your pocket. Hire a professional if your tax return is complicated or complex in any way.

File on Time

Seeking an extension or filing an amended return can activate you for review by IRS systems, particularly for high-end earners. The same is true for those that file paper returns. It’s always best to e-file and makes sure they’re filed before the deadline.

Documentation

When dealing with the IRS, documentation is everything. If there’s a chance that the IRS may not understand expenses you’ve claimed or deductions, the onus will be on you to provide documentation to prove your right to make the claims. A professional tax preparer will know what documentation you’ll need.

Deductions

Another instance that will red-flag your tax return is the deduction-to-income-ratio. Deduction amounts that are unusually high compared to stated income may be a symptom of claiming the same deductions twice in the eyes of the IRS. Stay away from dubious deductions.

Exemptions

A high number of exemptions and dependents will bring unwarranted attention from the IRS. There are specific rules about what dependents are eligible for you to claim. For example, in some instances, a dependent may be required to file their own return, which means you can’t claim them.

Compliance

Remaining in compliance with your responsibilities in regard to withholding taxes, filing status, deductions, and exemptions will significantly reduce the potential for a tax audit. If you do get audited, having a professional file your tax return will ensure you have knowledgeable backup should you need it.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

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In today’s busy world, it can be difficult to monitor and manage your financial health. Keeping track of your finances involves more than simply knowing how much is in your account or making sure you pay the rent or mortgage on time. There are a number of ways that anyone can utilize to better manage their money that includes the following, in no particular order.

Accurate Budgeting

A budget doesn’t mean you can’t spend for fun. It does mean that you need to account for the must-pay expenses first, such as rent, car payments, utilities, groceries, and insurance premiums. The remainder will provide information on major expenditures ad areas where you might save.

The Little Things

Small expenses are the bane of a budget. They nibble away at money that you could be saving and they account for a significant amount of money each day. Some of those small expenses include eating lunch out, whether it’s by yourself or with co-workers, or designer coffees and juices. Start saving receipts from each purchase and total them up at the end of the month or use a debit card for each purchase so you can go back and identify each one on your bank statement.

Savings

Everyone should have a savings goal whether it’s for a major purchase or for retirement purposes. If your budget doesn’t have a category for savings, create one. It can be any amount you want, but financial advisers recommend a set percentage of your income. Don’t be tempted to draw upon your savings. If you have extra money at the end of the month, shift it to your savings.

Software

There are dozens of software programs that will help you budget your money, track expenditures, and even send you alerts via mobile device so it’s easy to manage your money on the go with today’s busy lifestyles.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

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Small business owners have more than their share of tax-related items to consider and an accounting firm can help in a number of ways. It can provide bookkeeping services, tax consulting and return preparation, payroll processing, cash flow estimations, and even litigation support if needed.

As a business owner, you may need to make difficult decisions based on your own unique circumstances and the industry you’re in, along with current and future economic trends. You never know when an emergency will occur or what type – as evidenced by the COVID-19 pandemic. An accounting firm that’s adaptable and can act quickly in your best interests is worth its weight in gold.

Accounting firms can help you achieve greater success and business health through insights and experience gained over many years, combined with an in-depth knowledge of financial matters. An accounting firm has the ability to provide precise and highly-detailed reports about all areas of your financial health. It can also identify opportunities for growth of which you may not be aware.

Hiring an accounting firm provides the means to maintain financial stability. You’ll know at every juncture what your cash flow is for consistent and reliable growth. You’ll know the number of staff to hire, when not to take on new challenges, and be able to serve your clients in the best way possible.

An accounting firm also provides you with the means to market your business more efficiently and effectively for the acquisition of new clients. Knowing the financial health of the business will enable you to launch marketing campaigns at the most opportune time.

Greater efficiency is another way that an accounting firm can help your small business prosper. They provide you with highly accurate financial information so you’ll know the best time to expand or make other investments that can make the enterprise more efficient and profitable. An accounting firm helps you get all aspects of your business finances under control and in order.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

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At tax time, everyone is looking for ways to reduce their tax liability and keep more of their hard-earned income. It’s possible to reduce your liability without having your return red-flagged by the IRS. The following are just some of the common ways to do so.

Business Expenses

If you own a small business, always hire a professional to do your taxes. There are a variety of deductions you may be eligible to take, but may not take advantage of for fear of triggering an audit. A professional tax preparer will be cognizant of the types of expenses that you can claim and the documentation you’ll need.

Charity

Charitable donations can be written off if they exceed your standard deduction and you itemize your taxes. You’ll need receipts to prove the contribution and they should be realistic.

College

You can contribute to a 529 account for yourself or grandchildren, nieces and nephews. You can’t deduct a 529 on federal taxes, but it can provide savings on state tax returns, depending upon the state in which you live. You can also deduct $2,000 in educational expenses through the Lifetime Learning Credit, even if you aren’t working toward a degree and your income isn’t too high.

Health Insurance

The federal government will no longer penalize you financially for not having insurance, but many states have initiated their own fines in the form of a tax for not having a qualifying healthcare plan. The rules vary on what a qualifying health plan means, so it’s best to consult with a professional and get covered.

Retirement Funds

Contribute as much as you can to an IRA or 401k account. You can contribute $6,000 to an IRA or $19,000 to a 401k. Additional amounts can be contributed if you’re over 50.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

Contact Us Today