The Office of Management and Budget reports that between 2010 and 2018, the wealthy paid an average of 8.2 percent of their income from their wealth, and a large part of their wealth went untaxed. There are 22 different tax brackets in 2022, with the highest rate at 37 percent, making the taxation system confusing at best.

That estimate is at odds with millionaire Warren Buffett’s statement in 2013, who famously said he pays lower taxes than his secretary. The wealthy pay less in taxes for multiple reasons. The first is that their income is derived from dividends, stocks, and capital gains from investments, rather than wages, that are taxed at a lower rate of 20 percent.

Additionally, a tax code feature called “stepped up basis,” says gains on an asset is never subject to income tax if an asset isn’t sold during the owner’s lifetime. That continues when the wealthy pass it on to their heirs.

That means that a significant amount of the wealthy’s income will never appear on their income tax return. A study by the White House in Sept. 2021 showed that the wealthy paid an average of 8.2 percent in actual taxes, while the typical middle-class family paid 13.3 percent.

Taxes are just one component of a highly complicated and complex tax code that enables the ultra-rich to pay a small fraction of taxes on their actual wealth. They use legal loopholes that includes depreciation, hiring their children, deducting business expenses, and rolling forward business losses.

Other legal methods of avoiding income taxes are deducting interest payments on debt, claiming investment losses, and like-kind exchanges of property. The wealthy also claim a deduction when they transfer money to their own philanthropic foundations.

For millions of Americans, the avenues used by the wealthy aren’t available to the average taxpayer. It’s also interesting to note that in the 1950s and 1960s, the federal income tax rate was 91 percent for the wealthy, down from 94 percent in 1944-1945. The tax rate for the wealthy has steadily been decreasing since then.

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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You’ll be required to complete a W-4 form anytime you start a new job. It tells your employer the correct amount of federal income tax and state tax to withhold from each of your checks. It’s known as the Employee’s Withholding Certificate and a new form should be completed anytime your circumstances change. It determines your tax liability at the end of the year and if you’re entitled to a refund.

Many individuals claim a greater number of withholdings than they need in expectation of a large refund at the end of the year. However, the IRS advises minimizing withholdings to make tax liability and the amount of taxes withheld as equal as possible.

Too little withholding can result in a significant tax bill at the end of the year and penalties for underpayment. Conversely, withholding too much will give you less available income throughout the year, while essentially giving the government an interest free loan.

A larger withholding base on your W-4 can be helpful if you have a side hustle or are part of the gig economy. If you have income from either source, you’ll have to report it on your federal income tax and you’ll be taxed at a higher rate as being self-employed.

There are several situations in which you’ll want to change your W-4 withholdings. They include marriage, having a child or adopting one, getting divorced, or if a spouse gets a job or changes employment. You can also request in writing that your employer compute withholdings on the part-year method if you work no more than 245 days per year.

Your W-4 is a critical tool in determining how much money you take home with each paycheck and how much money you owe at tax time. The amount withheld will also have an impact on your standard of living throughout the year.

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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Increasing concern for the environment has led many to pursue a career as an environmental accountant without fully understanding what’s involved. It’s a field that was first introduced in the 1980s and is employed by multiple types of businesses and governments to determine the best way to conduct business, while minimizing the impact on the environment.

There are four types of environmental accounts. They encompass environmental financial accounting, environmental cost accounting, environmental management accounting, and environmental national accounting.

Environmental financial accounting pertains to estimating and public reporting of environmental liabilities, along with financial material environmental costs. They produce reports of exposure and management of the financial and non-financial impacts due to climate change of various entities.

An environmental cost accounting expert is concerned with the use and depletion of natural resources. The professionals calculate the costs of managing natural resources and the operational costs of doing so within multiple types of organizations and businesses.

Environmental management accounting helps companies save money and provide product pricing through optimal use of resources. The information can result in cleaner production practices. The primary benefit is increasing value for shareholders, improving an entity’s reputation, and improving the public’s perception of a company.

The field of environmental national accounting is used to determine a country’s economy and the environment. It takes into consideration a country’s physical and monetary assets and operational costs of natural resources.

The environment plays a vital role in the economy. Environmental accountants provide businesses and nations with important data that’s instrumental in determining criteria ranging from economic health, degradation of natural resources, and the costs of pollution. The professionals provide data on the contribution of the environment to the economy and vice-versa.

Environmental accounting is also known as green accounting. The accounting processes have become invaluable for business and countries in making policies in regard to natural resources in an international marketplace.

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 taxpayers are faced with high income tax bills they can’t immediately pay in full, the first reaction is typically panic. There is a way to buy some time to gather the necessary documents needed to file a return, but it won’t give individuals extra time to pay their taxes. They’ll still be due on the appointed date set by the IRS.

Filing an extension will give taxpayers until Oct 15 to gather their documentation. Individuals will need to file a special form and they’ll be required to estimate their tax liability. There are some rules to which individuals must adhere and they’ll typically be subject to fines and fees if they don’t pay what they owe in full.

In many instances, it’s best to have the services of an income tax professional who knows the exact requirements, forms and deadlines, as there are a multitude of forms for different entities. People at any income level, along with businesses, can file an extension on their federal taxes and they can even do so if they file electronically.

If Oct. 15 falls on a Saturday, Sunday or holiday, the next business day will be considered the due date. An extension can also be obtained by paying all or part of the taxes owed by indicating the payment is for an extension. Using Direct Pay, the electronic federal tax payment system (EFTPS), or a debit or credit card offers several benefits.

EFTPS enables people to schedule payments up to 365 days in advance and payments can be made from any location. Payments can be rescheduled if necessary and tracked via email. Individuals can view 15 months of their payment history.

One of the reasons that hiring a tax professional is a good investment is that there may be special rules that apply to individuals living outside the U.S., those serving in a combat zone, or a hazardous duty location.

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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For those that don’t have the money to pay their tax bills in full, the IRS offers tax relief programs. The initiatives help taxpayers settle tax-related debts for less than the total amount, thereby preventing liens from being placed on their assets. They typically utilize a monthly repayment plan.

Tax relief programs won’t eliminate the money owed to the IRS, but it will help make it easier to repay. The IRS will charge interest on any unpaid taxes, along with a setup fee for its programs. To qualify for a long-term repayment plan of more than 120 days, individuals must owe $50,000 or more in taxes, penalties and interest.

Individuals that have been affected by natural disasters have access to tax relief initiatives. People should consult a tax specialist that’s knowledgeable in the regulations and forms required to take advantage of specific programs.

The IRS is currently offering tax relief programs to victims of wildfires, straight line winds, landslides and mudslides, flooding, tornadoes and hurricanes in certain areas. The tax relief initiatives provide extra time for taxpayers to file their federal return, pay their taxes, and file any required forms.

Another initiative of the IRS is penalty relief/interest abatement. Under the program, the IRS may forgive any penalties charged to the person’s tax bill, providing they meet certain criteria. Individuals will still owe their taxes, but eliminating penalties can save a substantial amount of money.

There are also companies that negotiate with the IRS on behalf of a client. Their fees can run into thousands of dollars and there’s no guarantee that they’ll be successful. Individuals should be wary of upfront fees, undesirable refund policies, and default billing if they decide to cancel.

The best option for those seeking tax relief is to engage the services of a qualified tax professional that has the authority to represent individuals with the IRS. Those include a CPA, attorney, or federally authorized tax practitioner.

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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One of the many deductions possible on your federal income taxes is mileage driven for work-related endeavors if you use your own vehicle. Those deductions can be taken if you’re self-employed. It’s also possible to deduct mileage if your employer requires you to travel using your own vehicle – providing the employer doesn’t reimburse you for mileage.

There are two ways to calculate the mileage. The first is based on the business-related percentage of the total miles driven. The second method is by multiplying the miles you drive for work by the IRS’s standard mileage rate. The rate changes each year. In 2022, the IRS increased the mileage rate to 62.5 cents per mile due to soaring gas prices.

There are a great number of jobs in which an employer expects the employee to use their own vehicle as part of the job. They include delivery drivers, salespeople, couriers, service techs, reporters, on-demand shoppers, and ride-shares. You can also claim mileage for medical-related reasons and charitable driving.

A key component for claiming mileage is keeping a detailed record of the date, miles driven with the beginning and ending mileage stated, and the reason. There are apps that will do this. The IRS may demand to see a logbook of the miles traveled to determine if you’re eligible for the deduction. While it’s unusual for the IRS to do so, they have the option of doing so.

If an employer requires you to use your personal vehicle for work, but doesn’t reimburse you for mileage, you can claim the mileage by the actual number of miles or the IRS’s standard mileage rate. It’s a lot more complicated if you have an employer that reimburses you for mileage. You’ll first have to know if the company’s reimbursement policy is an accountable plan.

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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There are thousands of scams being perpetrated each year. Most victims are the elderly, but a substantial number of younger individuals are also affected. The scams may work by eliciting an emotional response or promising a financial return. They all have the same goal – to strip people of their money and peace of mind.

Scammers try to gain trust by claiming to be from a person or organization with which the victim is familiar. Others try to instill fear, such as a suspension of an account, threats of being arrested, utilities being shut off, or that the victim’s account has been compromised.

Scammers will attempt to make their victim take immediate action, pay in gift cards, or make wireless transfers. There are a number of precautions that individuals can take to protect themselves from being scammed.

Security Software

Install security software on all computers and mobile devices. Turn on automatic updates to ensure they’re protected against the latest threats.

Passwords

Create strong passwords that are at least 8 characters in length, includes a mix of upper- and lower-case letters, at least 1 number, and a special character. Password protection also applies to home internet connections. Secure home routers with a password and use extreme caution when connecting to public Wi-Fi networks.

Phishing

These scams use emails and fake websites to trick people into providing personal information. Don’t disclose personal information online, click on links in emails, or disclose login information. Report these to the Federal Trade Commission and to the organization being impersonated.

Personal Information

Never provide personal information on social media sites and lock down privacy settings. Scammers can glean a lot about people through their social media profiles. Don’t accept friend requests from unknown people.

Safe Shopping

Make sure the online shopping website’s address begins with https, indicating it uses secure technology. When checking out, make sure https is part of the address and/or check to see if a padlock symbol is visible on the page.

Privacy Policies

Read the website’s privacy policy to see how it protects personal information that’s collected and if it shares that information with third parties. If the policy isn’t easy to understand or not provided, consider going elsewhere to shop.

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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Not to be confused with interest rates on a mortgage or ongoing property taxes to be paid each year, a mortgage recording tax is used to document a loan transaction. It’s a fee that’s paid when someone takes out a mortgage. There are currently eight states that charge a mortgage tax and one of those is Florida. Numerous lending institutions offer online mortgage tax calculators that perform the financial calculations.

Individuals can do the math themselves by taking the total amount being borrowed and dividing it by 100. Then round up that number to the nearest whole number. Local laws may allow for a deduction to reduce the amount.

Florida residents pay 35 cents per $100, based on the amount of debt being incurred on the mortgage. However, that amount can vary among counties and a surtax may also apply. It’s customary for the seller to pay the tax, though that isn’t a mandate. The real estate agent is responsible for securing a check for the amount before the deed is recorded.

Failure to pay the amount promptly can result in the state assessing a monthly penalty fee. A floating interest rate may also be placed on any unpaid document. Parties exempt from the tax include state and federal government agencies, political subdivisions, and Florida counties and municipalities. When an entity is exempt from the tax, the other party must pay it.

Many types of deeds require this documentation, including warranty and quit claim deeds, easements, and contracts for mineral, timber, gas and oil rights. A mortgage tax is also collected if an individual refinances. However, a mortgage reassignment can transfer the original mortgage tax to the new lender. Not all lending institutions will do this, but if the lender agrees to do so, it can save individuals a significant amount of money.

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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One of the biggest misconceptions about filing an extension on federal tax returns is that it means individuals don’t have to pay any amount owed on time. An extension gives people more time to file, but not more time to pay.

Individuals can file an extension on their federal taxes, but it has to be done before the last day for filing the taxes. An extension provides taxpayers with additional months to prepare and file their return for any reason. The IRS automatically grants a request for an extension, but the proper forms must be filed and the extension is valid until Oct. 15. The extension can be filed electronically.

Taxpayers are expected to pay the full amount they owe by the tax deadline, even if they file an extension. The IRS assesses a penalty for late payments, usually 0.5 percent per month of the balance that’s due, but failing to pay can increase that penalty to a maximum of 25 percent.

There are 3 primary reasons that individuals file an extension. The first is missing or inaccurate information. Many people find that they haven’t received a form they need in time to file.

The second most common reason for an extension is that a taxpayer will be out of town during tax season. Many people from northern states winter in the south, while others choose to vacation during spring break. If they anticipate a refund, they often file an extension.

Lastly, people run out of time. Filing federal taxes can be stressful, leading to procrastination. Despite taxes being due on or near the same date every year, some individuals lose track of time, simply get busy, or find themselves dealing with a major life event.

For those that don’t have the money to pay their tax bill in full, the IRS offers some payment plans. Individuals will still have to pay their tax bill, along with any applicable penalties and interest, but at a lower rate. Installment agreements are also available, in which individuals pay a set amount each month. The IRS advises individuals pay their tax burden with a credit card or take out a loan to save money.

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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Farm businesses need the services of an agricultural accountant. In many instances, farm businesses are large corporations. Farm accountants provide an essential service for farmers, helping them anticipate expenses, track expenditures, and ascertain ventures that will be most profitable – such as planting more corn, wheat or soybeans and letting field lie fallow.

Reporting and tracking farm expenses pose some interesting challenges. Cash basis accounting is one type of method to report income and costs and can be used to report taxable farm income. Farm accounting is utilized to record all goods, money and services used in the farming industry.

A farm accountant will deal with a variety of aspects relating to their client, from cash flow, day-to-day expenses, government subsidies when applicable, and even estate planning. Farm accountants provide a wide range of information to their clients to help them make informed and strategic decisions about their business and potential risks.

Agriculture plays a major role in the nation’s overall economy, just as much as oil and other resources. The accounting specialists will need an extensive variety of knowledge. They’ll need to be cognizant of fluctuating costs and prices, have an understanding of how unpredictable weather affects the business, and changing commodity prices locally and around the globe.

Farming is a unique type of business with special challenges. Farmers always have the last decision, but they rely on an agricultural accountant to help them plan for purchases of land, equipment and the operation of their business. Agricultural accounts are responsible for filing taxes on time, accounting for assets, liabilities and depreciation, along with meeting specific government regulations and definitions.

Farm accounting is an ideal profession for anyone that loves numbers and farming. They’ll be called upon to keep track of arable land to native plants, pasture to crop production, changes in land use, and even green/sustainable farming practices.

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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