Approximately 33 percent of all taxpayers prepare their own taxes each year, thanks to online tax preparation software. What you may not know is that you could be leaving money on the table by not consulting with a tax accountant. Tax laws are highly complex and complicated. The following are just some of the ways that a tax accountant can help.

Minimize Audits

The odds of being audited increase the more you make and a tax accountant will considerably reduce the potential. If you make less than $200,000, the chances of being audited is 0.9 percent. That number increases to 3.7 percent if you make over $200,000 and 12.5 percent if your income exceeds $1 million.

Own a Business

If you own a business, are self-employed, or are in partnership, a tax accountant can determine how much you should pay in quarterly taxes. The benefit is that you won’t be faced with a huge tax bill at the end of the year.

Life Changes

Buying a house, getting married, having a child, getting a divorce, or investing in the stock market are all significant events in anyone’s life. A tax account is able to help you take advantage of the available tax breaks and even help you adjust your withholding to accommodate those changes.

Failure to Pay

If for any reason you failed to pay your taxes in the past or owe a balance, a tax accountant is able to help you file appropriately. He/she will also know about IRS programs designed to help people in these situations.

Other Situations

A tax accountant can help in a wide variety of situations, including if you’re anticipating a large capital gains tax, have investments and income from foreign sources, or if you have rental properties. You can utilize a like-kind-exchange to minimize taxes if you’re thinking of selling real estate. A tax accountant can also help you if you’re planning on making a large gift, putting away money for your kids’ college, or creating a trust.

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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Documentation is essential for the IRS when filing taxes. Saving receipts and a myriad of tax-related items can seem overwhelming. Without a system for preserving documents, individuals can easily lose track of those important papers. The result is lost money in deductions.

No matter what method people use, it’s important that they choose a system that best fits their needs and more importantly, they’re likely to maintain. No one enjoys the process of saving documents for tax time or sorting through them, but it’s a critical step for income tax returns.

Another option that people are turning to is digital documents. Digital scanners are an excellent way to keep a backup copy of paperwork of all types. It’s a good idea to keep originals, while digital copies provide an important resource in the event of an audit. Digital documents can also be backed up to the cloud. The following are four ways that people can utilize to keep their tax documents organized.

Boxes

It may seem old-fashioned, but a simple box with file folders is still a reliable way to keep track of tax documents. When individuals receive receipts and other important paper documents, simply place them in the correct file folder. However, many people still maintain a box in which they drop documents, pay slips and receipts and just sort them at the end of the year.

Envelopes

Equally effective is using 9×12 manilla envelopes and labeling each envelope for specific categories. Don’t forget to write the tax year the documents are for on the envelope. The envelopes need to be placed in a box or file cabinet to ensure all tax documents are kept together in a single location.

Category

There are deductions for a wide variety of situations. Individuals can organize their documents by categories that include, home, business, military service, and employer, and self-employment for side hustles.

Spreadsheet

Individuals will still need to keep the originals, but a spreadsheet is an easy method to jog a memory at the end of the year and ensure that income and expenditures match the paper documents kept in boxes and envelopes.

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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When you finally decide it is time to prepare your taxes, the first question is whether you should itemize your deductions or take the standard deduction provided by the IRS.

Tax deductions are a very simple part of a theoretically simple tax reporting system. If you’ve ever prepared your own taxes, you know this simply isn’t true. Complicated tax forms can be a nightmare to fill out. Ever helpful, the IRS gives you an option of just taking a standard deduction instead of itemizing your deductions. So, what should you do?

The standard deduction is the easiest method because it requires no calculations or supporting documentation of any sort. You figure out your adjusted gross income and simply submit the amount for your classification. The amount differs based on whether you are filing as single, married, older than 65 or have kids.

Many people scoff at the mere idea of taking the standard deduction. As with all tax issues, deciding whether to take the standard deduction isn’t so easy. If you have a fairly simple financial life and don’t have many deductions, the standard deduction is almost always the best choice. For instance, if you make $45,000 as an employee of a company, rent a residence and don’t have any major medical bills or losses, the standard deduction is probably going to save you more money than itemizing. Unfortunately, you can never be sure until you take a stab at itemizing your deductions in a rough draft of a tax return.

Itemizing your deductions is exactly what it sounds like. You literally go through your records and categorize every possible deduction. These deductions are then subtracted from your adjusted gross income to get a final figure from which tax is determined using the tax tables. Itemizing is the way to go if you have significant tax deductions or tax credits in your financial life. For instance, you almost always want to itemize if you own a home as mortgage interest can be deducted. Generally, you want to itemize if you own a home, have significant medical bills, can claim a tax credit or suffered some type of major loss. Obviously, there are other situations where itemizing makes sense, but this gives you an idea of the situation.

If you have a simple financial situation, claiming the standard deduction may be the answer. If life is a bit more complicated, itemizing is probably going to save you more on your tax bill.

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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A CMA is a Certified Management Accountant.  This is different from a Certified Public Accountant.  A Certified Management Accountant is employed by a business firm or a not-for-profit organization and deal with private accounting.

A CMA can obtain employment by companies, government, and non-for-profit entities.  A CMA can obtain employment as a Bookkeeper, Payroll Clerk, General Accountant, Budget Analyst, Cost Accountant, Internal Auditor, or Information Technology Auditor.  These CMA careers have starting salaries ranging from $28,500 to $72,500, which is much higher than the salary range for CPAs.  

A Bookkeeper does not need to have any certification and therefore does not have to be a CMA.  A Payroll Clerk must have certification called Certified Payroll Professional, or CPP, but does not need to be a CMA.  A general accountant or budget analyst may not be required to be a CMA, but many CMAs begin as a general accountant or budget analyst.  A Cost accountant must be a CMA and be licensed by whatever state agency monitors and regulates accountancy in that state. An Internal auditor must be a CMA and have an additional certification as a certified internal auditor, or CIA.  An Information technology auditor must be a CMA and also have certified information system auditor licensing, or CISA.

The certification program to become a CMA is sponsored by the Institute of Management Accountants or IMA.  The CMA certification is proof of competence in management accounting. To receive a CMA certification, you must have a college degree, two years of experience, and pass a two-day session of testing.  

A CMA does not have the versatility of a CPA.  Because a CMA works internally within a firm, the duties given to a CMA are fairly rote, meaning that the CMA does typically the same work each day.  On the other hand, a CPA has as much variety in the type of work and work duties as the variety of his or her clients. It is due to this fact that most accountants choose to obtain a CPA certification and licensing rather than a CMA certification and licensing.

Most CMAs are cost accountants.  A CMA cost accountant enters transactions into accounting records like journals and ledgers.  CMA cost accountants also prepare financial statements. The financial statements that the CMA prepares are vital to the business.  The financial statements that the CMA prepares are used for business decision making, investor decision making, competitive comparison, and searching for industry trends.  A CMA must also attempt to discover and correct any errors in the cost accounting records. This can be done in a number of ways but is always very tedious for the CMA.

A CMA should be found if you are starting a business that will require extensive and accurate bookkeeping and accounting.  You can save a lot of money in your business by hiring a CMA in house rather than using a CPA on a fee for service basis. In this way, you are left free to run your business while someone else worries about the accounting for your business

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