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Raising Money Smart Kids

In days gone by, personal finance skills were taught in school. The courses went by the wayside
as other subjects were deemed more important. An example is algebra, which is a required
course, but one that few students use after leaving school. Be advised that youngsters tend to
emulate the financial attitudes of their parents and good financial habits can be learned.

Begin in Childhood
Parents shouldn’t be afraid to discuss money matters in front of the children. The age of 7 is a
good time to begin financial education by teaching children good spending habits. Young
children can be given a weekly amount, while teens can receive an amount at 2-week intervals.
It’s a good idea to tie the stipend to chores to encourage a work ethic.

Saving
The ability to save money rather than spending it for instant gratification is one of the best
lessons a child can learn. If the youngster wants something specific, suggest they save a portion
of their funds until they have the required amount.

Extra Earnings
The opportunity to earn extra money provides children with more control over how they earn,
save and spend. It also teaches a work ethic.

Philanthropy
Introduce children to the concept of philanthropy. Parents that give to charitable endeavors
should take their children with them when they contribute and talk about why they’re giving
back to the community.

Resist Temptation
It’s difficult for parents to see their children want something and struggle to achieve it. Resist
the temptation to give youngsters extra money before the allotted time. The negative
consequences of being careless with their money is a strong and powerful lesson. Be sure to
discuss spending habits with children and ways they can do better in the future.

Budgeting
The early foundation for budgeting as a child will help teens. Show them how to create a
budget that accounts for the things they need vs things they want. It’s a lesson in prioritization.

Pitfalls
It’s equally important to discuss the pitfalls of high-interest student loans and credit card debt,
along with paying bills on time, as youngsters mature into adults.

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tax accountant

How to Become an Accountant

Certified public accountants (CPAs) are in high demand and not just at tax time. They act as
trusted consultants on financial matters and maintain information on accounts for individuals,
businesses, and even non-profit organizations. CPAs assist clients in attaining their financial
goals. The professionals can choose to specialize in a particular area of accounting
encompassing taxation, personal finance, forensic accounting or environmental accounting.

College Level Accounting
CPAs in Florida are required to complete 150 semester hours of college-level education in
accounting by an accredited educational institution.

Acquire Experience
Those desiring to become a CPA must also complete a required 2,000 hours of experience over
12 months of work or a minimum of 20 hours per week. A CPA that’s currently licensed or an
approved chartered accountant must verify the hours. Individuals can begin working toward
the completion of their work experience after completing 120 hours of classwork from an
accredited educational institution.

CPA Exam
Prospective CPAs must pass the Uniform CPA Exam. Created and developed by the American
Institute of Certified Public Accountants (AICPA), it’s the only pathway to being able to practice
as a CPA. Candidates must apply to the Florida Dept. of Business and Professional Regulation
(DBPR), Division of Certified Public Accountants to receive authorization to take the exam. The
4-part exam must be passed within an 18-month time period.

Licensure
Licensing is required of CPAs to pursue their chosen profession. They must create an account
with the DBPR to apply for a license. Individuals must also provide documentation that they’ve
completed all the educational requirements; work experience; exam results; pay a fee; and
submit their application. This must be accomplished within 3 years of passing their exam via a
printable form or an online portal.

Licenses must be renewed every 2 years. CPAs are required to complete 80 hours of ongoing
education, of which 8 must be in accounting, auditing and technical business. In addition,
behavioral coursework must be completed, limited to no more than 20 hours, along with a
minimum of 4 hours in ethics.

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tax deductions

First Steps to Take When Audited by the IRS

The IRS is one of the few governmental agencies that has the ability to make people freeze in terror – and for good reason. The IRS has the authority to garnish wages, levy fines, take money from your bank accounts, and confiscate your car, home and other personal property. When the IRS notifies you of an audit, there are specific steps to take.

Don’t Panic

Difficult as it may be, you need to remain calm if you’re to discover the extent and reason for the audit. It may be the result of an innocent mistake and easily rectified. The IRS notification will explain why you’re being audited.

It may not even be the result of an actual error. The IRS uses computer technology that screens and selects returns to be audited. They’re often chosen based on a statistical formula against what the IRS considers the “norm.”

People with incomes of 25,000 or less and those making $500,000 or more are the most likely to be audited. If the company you work for is audited, you might be, too.

The Process

Most IRS audits are conducted via mail and there’s no need to sit face-to-face with an auditor. However, if you receive a notice that you’re being audited, providing a timely response is critical. You should know that the IRS has up to three years in which it can start and conclude the audit process from one of your tax returns.

Hire a Professional

It’s an excellent idea to hire a tax professional that’s legally able to represent you in an audit. Collect all the documentation that you used to complete your return in the year for which you’re being audited. The more information you can provide to the tax professional, the better he/she can advocate for your interests.

Findings

You should know that if the auditor finds you at fault, you have the right to appeal within 30 days. The IRS will send a letter indicating the audit is closed, at which time you can appeal. Unfortunately, many people only see the decision rendered in the letter, not their ability to dispute the findings. You must appeal within 30 days of receiving the letter.

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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Managing Taxes in Retirement

Retirement is a critical time in an individual’s life in financial terms. A retiree’s ability to live as they want will depend on their investments, the age they retire, and the lifestyle they want to maintain. It’s beneficial to consult with an accountant to take advantage of all the ways to save.

Diversification

Diversity in investments can help people manage their tax burden. Not all income is taxed the same. Some sources are taxed as long-term capital gains that don’t add to the yearly tax responsibility.

The 15 Percent

The 15 percent tax bracket is ideal for retirees. It’s possible for couples to make up to $100,000 after taking the standard deduction and still remain within the 15 percent bracket. They’ll receive zero tax on income sources as long as they qualify as long-term capital gains.

Roth IRA

This is one of the few resources that individuals can draw funds from that won’t add to taxable income, as it doesn’t involve pre-tax money. Traditional IRAs can be converted to a Roth IRA, though individuals will be taxed on the amount in the year that the IRA is converted.

Delay Withdrawals

Individuals may be able to draw on their retirement resources, but it’s best not to if they’re still working. After the age of 70, there’s no reason to delay withdrawing from retirement accounts. The SECURE Act resulted in changes to the Required Minimum Distribution. Waiting until age 72 to take the first distribution will result in paying a higher tax rate.

Social Security

Individuals may discover that up to 85 percent of their Social Security benefits are taxable, depending on the amount of money a person has from other resources.

No Tax States

Some retirees choose to relocate to states such as Florida and it’s not all about the climate. There are currently 39 states that provide tax exemptions on interest, dividends, pensions and/or Social Security benefits. Some don’t even charge state income tax.

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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What’s Typically Included in Accounting Services

An accounting service provides a variety of services that are an integral part of operating a financially solvent business and maintaining compliance. It’s essential that Individuals speak with several firms before choosing one to ensure that it will be able to meet business needs.

Some accounting firms offer a comprehensive range of services, while others specialize in one or more areas. Business owners may have requirements beyond bookkeeping, payroll and tax filing. It’s critical that the accounting service provide the services unique to a particular business operation.

Bookkeeping and Payroll

Owning a business doesn’t automatically mean that the owner is good with the financial responsibilities of operating an enterprise. Accounting firms can process payroll, issue checks, and provide the appropriate forms for onboarding new employees. The firms help business owners monitor cash flow and may offer services for accounts payable, receivable and past due.

Taxes

An accounting service will provide advice and assistance in planning for tax time, prepare the necessary documents, and file federal and state taxes. The firm can also represent a client in IRS audits and reviews. Accounting services work closely with clients to identify beneficial strategies and business structuring to take advantage of tax laws. Services ensure that clients are in compliance with state and federal regulatory and tax laws.

Valuation and Financing

Businesses want to grow and that may include obtaining a loan to purchase new equipment or expand a facility. It can also encompass mergers and business buyouts. An accounting firm can provide the documentation to prove the company’s valuation, worth and growth for banks or investors.

Estate Planning

Businesses have needs for estate planning that are unique An accounting firm is adept at identifying those needs. The firm will work with an attorney skilled in estate planning to establish a family trust or business ownership transfer.

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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tax brackets

How to Find a Copy of a Lost W-2

A W-2 is essential for filing taxes, but in the frenzy to collect all the necessary documentation needed to file each year, the form can easily become lost. It’s not uncommon for the forms to get lost in the mail. It’s a very good reason why individuals should have a filing system and not wait until the last minute to file their federal tax return.

Contact the Employer

If the employer has already mailed a W-2 to an employee, the individual can contact their employer, human resources, or the person in charge of payroll to get a duplicate. It’s typically the easiest and fastest way to obtain a duplicate copy. The form may be mailed, but a copy may be able to be immediately supplied.

Online Access

In some instances, employers utilize systems that will allow an individual to access their own information, see their W-2 online, and download a duplicate copy. Employees may be required to contact their employer or the payroll service to get access. If all attempts to obtain a duplicate W-2 from an employer has failed to produce results, it’s time to contact the IRS.

IRS Website

Businesses must also file tax returns. That includes information about employees and their earnings. If the employer has already provided that information to the IRS, individuals may be able to obtain a transcript of the data. Individuals will need to visit the official IRS website, click on “Get Your Tax Record,” and complete the required IRS form online.

Be prepared to answer questions. In addition to the individual’s contact information and employment dates, they’ll have to provide an estimate of their wages and taxes withheld. Employer contact information will also be required.

Alternative Form

Individuals will still be required to file their federal income taxes on time and pay any amount they owe. The IRS has a “Substitute for Form W-2 Wage and Tax Statement” that can be filed. If a W-2 is received after the person has already filed their taxes and the information is different, an emended tax return must be filed.

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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When Teens Need to File Their Own Tax Returns

Teens work a variety of jobs for extra money, they may be employed in the family business, or have unearned income from interest or dividends. In 2022, any child that earned $1,150 or more in unearned income is required to file a return. Tax laws surrounding teens, their income, and the type of income are complex. If in doubt, it’s best to hire a tax professional.

Earned Income

Anyone earning $12,550 or more is required to file a federal tax return and that includes teens. A minor that earns $400 or more in wages or tips working full- or part-time must file a tax return. Even if the teen isn’t required to file a return, it’s a good idea to do so if the employer withheld federal income tax from earnings.

Dependents

However, there are some important elements attached to the question of teen tax returns. It will depend on if the teen is 19 or younger, age 24 and a student, or permanently disabled. Another consideration is if the parent provided 50 percent or more of their support and how many months of the year the teen lived with their parent. If any of those situations apply, the teen may still qualify as a dependent.

Unearned Income

A teen that qualifies as a dependent and has unearned income of more than $1,100 must file a return. However, if the teen only had unearned income, parents may be able to include that income on their own tax return. The disadvantage is that it might propel parents into a higher tax bracket.

Earned & Unearned

Teens that have both earned and unearned income, will need to file their own return if they have more than $1,100 of unearned income, over $12,550 in earned income, or if the combined total is the larger of $1,100 or earned income of up to $12,200 plus $350.

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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3 Questions to Ask a Potential Tax Accountant

The tax code is highly complex. There are ways in which individuals can reduce their tax burden, many of which they’re unaware. Anyone can save themselves a significant amount of time, money and stress by hiring a tax accountant.

However, the tax professionals provide far more than assistance at tax time. Tax accountants help clients attain their financial goals, recommend tax strategies, and ensure taxes are filed accurately and on time. More than 74 million individuals and business owners received assistance from a tax professional in 2020. There are 3 essential questions to ask when hiring a tax accountant.

Self-Employment Taxes

Many individuals are operating side hustles and working in the gig economy without realizing that the IRS considers that self-employment. That makes earnings subject to additional taxes. Individuals should ask their tax accountant if they’re paying self-employment taxes and if there’s any way to reduce the amount.

Self-employment taxes include Social Security and Medicare, along with state and federal taxes on income. There are ways to reduce the tax burden and a tax accountant will know how to accomplish that.

Payroll

Business owners need to ask their tax accountant about placing themselves on the company’s payroll in the future. There’s a tax deduction that can be taken by doing so. Not all business entities are able to do this and a tax accountant will know if the client qualifies. For those that do qualify, it’s viewed as a distribution for IRS purposes and owners will be taxed as an employee.

Estimated Taxes

Many small business owners encounter problems during their first years of operation because they don’t budget for their taxes or fail to make estimated tax payments. A tax accountant will be able to provide sound advice and guidance on whether individuals should be making estimated tax payments.

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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Tax Professionals Can Help with an IRS Appeal

Everyone makes mistakes and that’s even true of the IRS. According to the IRS, more than 650,000 audits were performed in 2021. The IRS relies on a specialized computer program that screens tax returns for accuracy. Those selected for an audit are based on statistical “norms.” Even the smallest of mistakes can result in an audit. Individuals can appeal an IRS decision and a tax professional can help.

The IRS will send a letter indicating there was a problem with the tax return. Read it carefully. Individuals typically experience shock and fear when they receive a letter from the IRS. Don’t panic. Certified public accountants (CPAs), attorneys and enrolled agents can represent an individual during an audit.

Those tax professionals are cognizant of the audit process and can assist in minimizing penalties. Even if individuals prepared their taxes through one of the online companies that offer the service, they can hire a tax professional to represent them in an appeal.

The tax professional will understand the scope of the original audit and under what circumstances taxpayers can request an appeal if they disagree with the decision of the IRS. They’ll also know the proper steps to take, how to request an appeal, and where the request should be sent.

The IRS has very specific rules governing appeals. A written protest is required and must be filed within a predetermined timeframe. It’s easy for individuals to miss a step or respond to the wrong department within the agency without the guidance of a tax professional.

It’s easy to inadvertently become the target of an IRS audit. Appealing the agency’s decision is a complex procedure that individuals should never try to handle on their own. Hire a tax professional with the knowledge and experience to save clients time, money, stress, and ensure the appeal is addressed in a timely and appropriate manner.

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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Businesses Should Prepare for Tax Season Now

For those that own a business or are considered self-employed by the IRS – begin preparing for tax season now. There’s a mountain of documentation to collect. Waiting until the last minute can result in fines and other penalties.

Organize Documents

A substantial amount of tax reporting begins in January. There will be a variety of final documents that must be available when preparing a tax return. Preparation is especially important for small business owners and those considered by the IRS to be self-employed.

Prepare Early

Business owners can begin their returns as soon as they have the necessary documents. They can utilize personal tax software or use online filing sites, but the best solution is to hire a tax professional. Even though tax returns can be prepared early, the IRS won’t begin accepting them until a time the entity will announce.

Documentation

It’s far less stressful and more cost effective to have a tax professional do the work. The expert will need to understand the business and its financials. Individuals should be prepared with their employer ID number, along with receipts from sales and services, expenditures, and bank accounts, to name a few.

All of these documents and more are required for a tax professional to ensure a client is receiving all the deductions and credits to which they’re entitled, and to take advantage of any new state or federal tax laws. They can also ascertain if the business would benefit from itemizing expenses and calculate projected payroll taxes.

Extension

If necessary, a tax professional will be able to file for an extension, which gives business owners an additional 6 months of leeway to submit their tax return. An extension provides a grace period in which to file the return, but business owners will still have to pay any taxes that may be due on time.

An extension can be especially beneficial if any clarification is needed or if all of the essential documents aren’t immediately available. For those in some industries, there may be compliance and regulatory issues to consider.

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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