Nobody is perfect and mistakes happen, even on tax returns. Individuals may discover they didn’t claim all the credits or deductions for which they were eligible, forgot to claim income, or just made an error in addition or subtraction. Sometimes employers issue a corrected W2, which means the amounts used to file taxes are incorrect. All of those situations are good reasons to file an amended tax return.

Paper Copies

Don’t start over and try filing an entirely new tax return. The bad news is that individuals can’t e-file an amended return – it has to be a paper copy that’s mailed to the IRS. Individuals will also need to amend their state return. It’s best to seek the assistance of a tax professional for an amended tax return or if a superseding return is an option.

Time Limit

People that file an amended tax form must do so within 3 years from the date they filed the original return, or within 2 years from the date any tax was due – whichever is later. It can take up to 16 weeks for the IRS to process an amended return.

Additional Forms

It will also require filing additional IRS forms. A tax professional will know which IRS forms are applicable, based on the client’s particular situation. There are some special due dates that apply in the event of a natural disaster, service or injury in a combat one foreign tax credits, bad debts, and net operating losses.

The IRS will often catch simple errors and correct them. If a balance is owed due to the error or mistake, the IRS will send the taxpayer a letter indicating the nature of the problem and how much is owed.

Amended Returns & Audits

When filing an amended tax return, individuals can’t pick and choose the items to change or those that will obtain a bigger refund. Changes affect the entire return. Taxpayers should be aware that there’s a greater chance of being audited if they file an amended return.

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

E-filing a tax return is the quickest and easiest way to get a refund if one is due, prevent identity theft, and arrange for the financial resources required if a balance is owed. Despite the convenience and ease of filing digitally, many still don’t take advantage of the technology even though it has distinct advantages.

E-filing is offered by tax preparers, online tax services, and tax software programs. Filing digitally is an easy way to know if the return has been accepted by federal and state governments and track its progress.

Faster Refund

The biggest motivator for e-filing a tax return is a quicker refund for those that have money coming back. By choosing to file electronically, tax returns arrive quickly and individuals can have the funds deposited directly to their bank, a pre-paid card, or a cash app card. Paper tax returns take longer to arrive at the IRS and requires extra effort on the part of IRS workers to process. A return can take weeks to be processed.

Balance Due

For individuals that owe the IRS, filing early lets them know how much they owe and buys them extra time to come up with the money owed. The amount is due on the filing deadline. If the money owed is readily available, people can opt to have the money automatically withdrawn from their account.

Late Filers

There are those that always procrastinate and wait until the last minute to file their taxes. E-filing ensures that tax returns arrive at the IRS in a timely manner and prevents them from being late.

Avoid Extensions

Filing early can prevent tax payers from the need to apply for an extension. The IRS will charge interest and penalties on any outstanding tax debt until the balance is paid in full.

Identity Theft

The risk of identity theft and having a refund stolen increases the longer tax payers wait to file their return. The instances of fraudulent tax returns continue to increase and all the unscrupulous need to file a return and steal a tax return is an individual’s Social Security number. Tax payers at the highest risk are those that wait until the last minute to file.

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

Whether or not you pay taxes on your cryptocurrency holdings will rely on a variety of factors. Cryptocurrency is considered property by the IRS and is currently taxed in a similar way to stocks. However, if all you did was purchase digital currency with U.S. currency and it’s been sitting untouched in your wallet or an exchange, you may not need to report it.

Taxable Situations

You will need to report your cryptocurrency if you’ve traded one type of the digital currency for another or if you’ve sold cryptocurrency for government-issued currency known as fiat dollars. Similarly, the currency may be taxable if you’ve used it to purchase services or goods ranging from a cup of coffee to a new car.

Capital Gains

Using cryptocurrency doesn’t necessarily mean you’ll owe taxes on it, though you’ll need to report the transaction. Selling an asset such as cryptocurrency can be subject to a capital gains tax. Gains are taxed at either short or long-term rates. It will depend on when the digital currency was acquired and the date it was sold or disposed of, along with the amount you paid combined with any transaction fees.

Defer or Eliminate Taxes

You may be able to defer or completely eliminate, taxes on cryptocurrency holdings if you purchase inside an IRA, 401K or other retirement plan. Buying within a traditional IRA will defer taxes on the gains until you begin making distributions.

Hire a Professional

Cryptocurrency is still a gray area in the U.S. in many ways. It can be difficult and confusing to navigate the laws surrounding the digital currency. If your cryptocurrency history is complex, the expertise of a tax attorney can be invaluable when filing your yearly taxes. They can present you with strategies that are acceptable to the IRS for accounting for gains and losses.

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

There’s a lot of confusion about the definition of independent contractor when filing tax returns. According to the IRS, “An individual is an independent contractor if the payer has the right to direct the result of work, but not how it’s done or how it will be done.” The definition by the IRS doesn’t necessarily provide clarity for tax filers and serves to create more confusion.

Self-Employed

Independent contractors are considered to be self-employed. That means their earnings are subject to taxes, and they’ll pay Social Security and Medicare related taxes. Individuals that operate a part-time business are also considered to be self-employed, along with those that receive money in connection with hobbies and similar activities.

Net earnings of $400 or more from self-employment activity must be reported or if they meet other filing requirements as determined by the IRS. The IRS tax form 1040 or 1040-SR will be needed, along with Schedule C for losses. A 1099-NEC should be obtained for non-employee compensation.

Gig Workers

An independent contractor, as defined by the IRS, is especially important for the increasing number of gig workers. Income taxes aren’t withheld from their earnings and the full tax burden falls on them at tax time since they’re considered self-employed. The same rules and forms apply to gig workers as those that are self-employed.

Consider a Professional

The tax laws governing the self-employed can be extremely difficult to navigate. While most online tax services may be adequate for completing filing requirements and providing the needed forms, individuals that are considered self-employed can benefit from a professional tax preparer or a tax attorney.

The professionals will know exactly what forms are needed for each individual situation, along with any related deductions. Whether an individual is operating a full-time or part-time business in which they’re paid for their services, they’re considered self-employed for the purposes of the IRS.

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