There are still millions of people that haven’t received one or more stimulus checks issued by the government during the COVID-19 pandemic. If you’re one of the people that are waiting, you can still receive the first, second or third stimulus checks you’re missing. The stimulus was delivered via direct deposit, by check in the mail, and by prepaid debit card that were also delivered by the U.S. Postal Service.

According to the IRS, first and second stimulus payments can only be clamed on a 2020 tax return. If you’re missing the third payment, it can only be claimed on a 2021 tax return. Individuals will need to know the amount of the missing stimulus payment they’re claiming. You can find that amount by logging into your secure IRS account online. It will provide you with the amounts of all three Economic Impact Payments made to you.

You can’t claim missing first or second stimulus payments on your 2021 tax return. If you haven’t filed an income tax return for 2020, you’ll need to file one now. If you did file a return and didn’t claim the Recovery Rebate Credit, you’ll need to file an amended return.

If you filed a 2020 tax return and it hasn’t been processed yet, don’t file a second return. The IRS is still behind on processing millions of tax returns from 2020 due to errors and lack of personnel. The IRS is also expecting significant delays in processing 2021 tax returns.

People that didn’t receive their third round of Economic Impact Payments can claim it on their 2021 tax return. You must file a federal tax return to claim the funds, even if you don’t normally file or aren’t required to file. Any funds to which you were entitled will be used to reduce the amount of taxes you owe or issued as a refund.

Using online tax preparation software and filing online will help reduce errors that can delay the return and the software will also help you determine your 2021 Recovery Rebate Credit. Depending on your individual circumstances, the stimulus payment will be used to reduce the amount of taxes owed or will be issued as a refund. You can have refunds deposited to a bank account, prepaid debit card or alternative financial product. You’ll need to provide your account and routing numbers.

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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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!

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Individuals have an important decision to make each year at tax time – hire a tax accountant or use software. The decision will depend largely on how complicated an individual’s financial situation is, their income, investments, stocks and other factors.

Tax Accountant

One of the major benefits of hiring a tax accountant is that minimizes the potential for an audit. That’s especially important for high-income earners and those with stocks and investments. The IRS audits approximately 4 percent of all returns. The chances increase for people making over $200,000 per year, business owners – especially sole proprietorships, the credits and deductions claimed, if foreign assets are involved, and the complexity of the return.

Anyone with those risk factors would do well to seek the services of a tax accountant. They’re highly trained professionals that are knowledgeable about all aspects of tax law. Individuals consulting a tax accountant for the first time are usually surprised at the number of legal deductions they’ve been missing. A tax accountant can also provide advice about tax planning to lower your tax burden and help manage finances more effectively.

Tax accountants have access to professional-level tax software that’s far more sophisticated than that available as a single purchase or online as a service. A tax accountant is available to answer questions and provide guidance throughout the year, not just at tax time. Complicated business and investment issues that can be handled with alacrity by a tax accountant can take individuals days or weeks to research.

Tax Software

Most people simply look at the cost of consumer tax software as a primary benefit. Software to install on a computer can cost as little as $50. Online tax software fees are based on the complexity of the services requested and are charged when the taxes are completed. Software solutions are less expensive but really aren’t designed for those with complex tax forms.

Using tax software is easy, user-friendly, and faster than the services of a tax accountant, who make take several days or a week to complete taxes. Tax accountants must deal with sometimes hundreds of clients one at a time, while software servers can accommodate millions of users at the same time.

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 the digital age, a majority of individuals simply file their taxes through an online service that provides tax software. Others make use of tax preparers that can be found at kiosks located in malls and chain stores. The people that work in retail franchises such as H&R Block and Jackson Hewitt are competent for individuals that are filing a very straight forward tax return.

Individuals often find certified public accountants (CPAs) and enrolled agents (EAs) working at those kiosks. EAs are the elite by IRS standards and are allowed to represent clients before the IRS. For those that choose to utilize the experience and knowledge of a tax accountant, there’s some basic information individuals should ascertain before hiring them.

Qualifications

One of the best ways to find a reliable tax accountant is to seek recommendations and referrals from family, friends and business owners. Don’t be reticent about contacting the firm and asking questions. Contact the Better Business Bureau to see if any complaints may have been filed.

The tax accountant should be willing to provide their qualifications and any areas of specialization. Ask if they’ve ever been involved in an audit, how they handled the situation, and the outcome. Tax accountants can’t accept payment without a preparer tax ID number (PTIN). Make sure the tax accountant has one.

Due Diligence

After the initial interview with a tax accountant, individuals can contact the state’s board of accountancy to discover if they’re licensed, in good standing, and if they’ve had any disciplinary actions taken. It can also be helpful to search their name online.

Red Flags

There are some red flags of which every individual should be aware. If a tax accountant promises a large refund before they’ve even looked at a person’s financial situation, look elsewhere. The same is true if they tell a client they can claim an excessive number of deductions.

Shop Around

Every taxpayer and tax accountant won’t be a good fit for each other. Individuals have the right to shop around, change their mind, or even take their return elsewhere if they desire. If necessary, individuals can always ask for an extension on filing their taxes. No one should trust their finances and tax returns to someone without the proper certifications and experience.

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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Everyone wants to lower their tax burden by getting every possible deduction to which they’re entitled and medical expenses is one way to accomplish that. However, individuals must itemize to claim the deduction and much will depend on an individual’s income. Claiming medical expense deductions is beneficial if the amount of the deductions exceeds the standard deduction on income taxes.

What can be Deducted?

The IRS enables taxpayers to deduct unreimbursed medical, dental, vision, and mental health expenses for themselves, a spouse and dependents, up to 7.5 percent of their adjusted gross income. Those expenses can include diagnostics, mitigation, treatment and cures, along with preventative measures. Individuals can also deduct travel expenses.

The COVID-19 pandemic has left many individuals with astronomical medical bills. Some private insurance companies have pledged to cover all COVID-19 expenses, while others have not. Taxpayers that rely on Medicaid and Medicare for medical care may have co-pays and spend-downs that they can claim.

There are a great many expenses that taxpayers can deduct if they’re itemizing deductions, up to 7.5 percent of their adjusted gross income. They include fees to a wide range of medical and mental health professionals, including surgeons, dentists, chiropractors, psychiatrists and psychologists, and non-traditional medical practitioners.

Wide Range of Deductions

Other expenses include oral and injectable prescription medications, weight loss programs prescribed by a doctor, and in-patient costs for drug, alcohol and nicotine addiction. Nursing home costs, insurance premiums, and medical aids such as crutches, wheelchairs, dentures and even service dogs are all allowable expenses.

The range of medical-related expenses that can be deducted is extensive, but there are also restrictions on what can be claimed. For taxpayers with substantial costs, it can be beneficial to claim those deductions. The best solution for those intending to claim medical expense deductions is engaging the services of a tax professional or certified public accountant (CPA) that has the experience, knowledge and resources to help them get every deduction to which they’re qualified.

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 an accountant’s reporting systems, depreciation of a business’s fixed assets such as its buildings, equipment, computers, etc. is not recorded as a cash outlay. When an accountant measures profit on the accrual basis of accounting, he or she counts depreciation as an expense. Buildings, machinery, tools, vehicles and furniture all have a limited useful life. All fixed assets, except for actual land, have a limited lifetime of usefulness to a business. Depreciation is the method of accounting that allocates the total cost of fixed assets to each year of their use in helping the business generate revenue. 

Part of the total sales revenue of a business includes recover of cost invested in its fixed assets. In a real sense a business sells some of its fixed assets in the sales prices that it charges it customers. For example, when you go to a grocery store, a small portion of the price you pay for eggs or bread goes toward the cost of the buildings, the machinery, bread ovens, etc. Each reporting period, a business recoups part of the cost invested in its fixed assets. 

It’s not enough for the accountant to add back depreciation for the year to bottom-line profit. The changes in other assets, as well as the changes in liabilities, also affect cash flow from profit. The competent accountant will factor in all the changes that determine cash flow from profit. Depreciation is only one of many adjustments to the net income of a business to determine cash flow from operating activities. Amortization of intangible assets is another expense that is recorded against a business’s assets for year. It’s different in that it doesn’t require cash outlay in the year being charged with the expense. That occurred when the business invested in those tangible assets.

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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