Tax season can be stressful. But if you’re able to avoid the common pitfalls, you can save both time and money. The Internal Revenue Service (IRS) reports a large number of simple errors that taxpayers make on their returns. While electronic filers don’t make as many errors, many taxpayers improperly report their income or claim credits and deductions in an improper manner. Using a tax preparer (such as a CPA or enrolled agent) can help you. But even if you work with a professional, you still need to understand how to avoid these common errors.

Here are some of the common mistakes you should avoid while you’re filing your taxes.

#1: Filing Past the Deadline

If you don’t file your return by the due date, the IRS will send you a notice or letter if you owe them a Failure to File Penalty (which will be a percentage of the taxes that you didn’t pay on time). The IRS will calculate the penalty according to how late you file your tax return and the amount of unpaid taxes you owe as of the original due date.

If you don’t file on time, it can also delay any tax refund you may receive, so it literally pays to file your return by the deadline. If you need more time to file, you can always apply for an extension. But even if you can get an extension to file your return, it won’t extend the amount of time you have to pay.

#2: Not Filing Quarterly Estimated Taxes

You need to know if your income type requires you to pay taxes more than once a year. If you’re a freelancer or are self-employed in some other capacity, you don’t have an employer who will automatically withhold taxes from your paycheck. So, you will be required to pay quarterly estimated taxes (in addition to filing an annual return).

You can calculate your estimated quarterly taxes by filling out Form 1040-ES and mailing your payments to the IRS by the deadline for each quarter, which you can find on the form. You can also pay your quarterly estimated taxes online through the IRS tax payment service.

#3: Leaving Out or Messing Up Important Information

When it comes to filing your taxes, you need to make sure you have all the necessary information and it’s accurate. This means double-checking your name, address, Social Security number, and any other important information to avoid delaying the process. If you’re getting a refund and opt for a direct deposit, make sure the tax form has all the correct banking information. It will make sure all the money goes to the right place and you can access it as soon as possible.

You want to make sure you include copies of all the required documents, and be sure to sign your name at the end. The IRS doesn’t process returns that haven’t been signed, so you will need to give them a signed copy after the fact if you miss this important step. Be sure to put a stamp on the envelope, because the U. S. Postal Service won’t deliver a letter or package to the IRS without the right amount of postage.

#4: Not Double-Checking Your Math

Not double-checking your math can delay the processing of your return, but it can also cause you to pay an incorrect amount. This can result in the IRS charging interest on any unpaid taxes. Many people use tax preparation software or hire a professional to help them, because it helps them to avoid these types of penalties.

The IRS also has Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs that offer free basic tax return preparation to qualified individuals (including people with disabilities and with limited English-speaking skills).

#5: Not Taking Advantage of a Potential Tax Break

When you file your taxes, be sure to take advantage of any deductions and other tax breaks that may be available to you. If you have a child or take care of another dependent, you may be able to claim the Child Dependent Care Credit. If you own a small business, you may be able to claim certain purchases as business expenses that are tax-deductible. You also don’t want to claim credits for which you’re not eligible. You might get a bigger tax refund in the beginning, but it can lead to an audit that will cost you more in the long run.

If you’re looking for a CPA who can help you with tax preparation in Corpus Christi, be sure to reach out to Jennings & Hawley.

IRS audits are rare, and most of them are done by mail. You will, however, have to send a complete and timely response. Face-to-face IRS audits are even rarer, but it’s important to take a careful look at your record so you can be prepared for the audit interview. The determination of the IRS agent isn’t final, so you have the right to appeal. You can also get expert help and can even have a professional tax preparer represent you in an IRS audit.

The IRS doesn’t perform audits at random. They select returns that are most likely to have errors, and they base it on a complex set of criteria. After you file a return, the IRS usually has three years from that date to start and finish an audit. But they start most tax audits within a year after you file the return, with most of them being completed in less than a year.

How the IRS Audits Returns

The IRS will audit returns in the following ways:

• By mail (which is referred to as a correspondence audit).
• At an IRS office (which is referred to as an office or desk audit).
• In person at your home or place of business (which is referred to as a field audit).

During an audit, the IRS will ask you for any information or documents that can explain your position with regard to the tax return. It’s important to provide them with information exactly as they requested. And if you have a licensed tax preparer taking care of it, you can help this person by providing any relevant facts.

What to Do When the Notice Arrives

Getting a letter from the IRS can make some taxpayers nervous, but you don’t need to panic. The IRS sends notices and letters when they need to ask questions about a taxpayer’s return, let them know about a change to that person’s accounts, or request a payment.

Here are some things you should do once you receive a letter or notice from the IRS:

• Read the letter carefully — Most IRS letters and notices are about federal tax returns or tax accounts. Every notice will deal with a specific issue and will list any steps you need to take. A notice may reference changes to your account or list any taxes you owe. It may also make any payment request or inform you of any specific issues on a tax return. It’s important to take prompt action, because it can minimize any additional interest and penalty charges.
• Review the information — If the letter is about a changed or corrected tax return, you should review the information and compare it with the original return. If you agree with the changes, you should take notes about the corrections on your copy of the return and keep it for your records. In most cases, you only have to act if you don’t agree with the information, if the IRS asks for more information, or if you have a balance due.
• Take any requested action (including making a payment) — The IRS and any authorized debt collection agencies send letters in the mail. You can also access digital copies of certain IRS notices by logging into your IRS Online Account. And if you’re struggling to pay your tax bill, the IRS has several options that can help you.
• Only reply if you have been instructed to do so — You only need to respond to a notice unless you have been told to do so. There’s usually no need to call the IRS. But if you need to, you should use the number listed in the upper right-hand corner of the notice while having a copy of your tax return and the letter with you.
• Let the IRS know of a disputed notice — If you don’t agree with the IRS, you should follow the instructions on the notice to dispute it. Include any information and documents for the IRS to review while they’re evaluating the dispute.
• Keep the letter or notice for your records — You should keep any notices or letters you receive from the IRS. This includes any adjustment notices where the IRS takes action on your account. You should keep records for three years from the date you filed the tax return.

The IRS will never contact you via social media or text message. The first way they will contact you will always be in the mail. If you’re not sure if you owe money to the IRS, you can look at your tax account information on their website.

If you’re looking for a CPA in Corpus Christi that can help you with any tax situation, be sure to get in touch with Jennings & Hawley.

Having a budget is an important part of having a financial plan. Not only does it force you to keep track of your spending, but it also allows you to focus on which areas (such as loans and credit card debt) you need to pay off or pay down so you can save for retirement, education, or buying a home. While the process may seem daunting, it’s not hard to create a budget. Once you have one, most of the work will be done. You would only have to make minor changes as your spending and income habits change.

Here are some tips that can help you with your budget preparation.

#1: Learn from the Past

Before you can look into the future, you must get information about the past. You will need to look at your financial data from the last three years. You want to look for trends, patterns, and problem areas (in terms of both income and expenses). Take a close look at each line item to see if it has gone up or down in the last three years. Some expense categories are more likely to show a steady increase as prices go up, but they can be easily budgeted with an uptick in percentage. You want to look for any trends and anomalies that need to be adjusted or accounted for.

#2: Fine-Tune Your Expenses

You want to look at some of your ongoing costs (such as insurance and utility bills) because price increases can sneak up on you, but the budget preparation process can allow you to look at your regular spending habits. It will also allow you to trim down any discretionary expenses, but be sure to budget for an emergency fund.

#3: Track Your Income from a Realistic Viewpoint

To prepare a budget, you need to know how much money you’re bringing in each month. This includes regular wages, side hustles, freelance work, online sales, and other income streams. You want to focus on net income by factoring in taxes and other deductions, so you can get more accurate picture of your take-home pay.

If you budget based on gross income, you run the risk of overspending. If your income changes from month to month, you should base your budget on your lowest expected amount. This will keep you from scrambling if your income dips, and you can always adjust your budget during months when you earned more.

#4: Estimate Your Monthly Expenses

Knowing where your money is going is an important part of creating a workable budget, and it starts with categorizing your monthly expenses (which can be approached differently from person to person). List all of your fixed expenses, which are regular bills you have every month. This can include the following:

• Rent, mortgage payments, and homeowners association (HOA) fees.
• Utility expenses (such as electricity, natural gas, internet, and phone services).
• Transportation expenses (such as car payments, gas, and public transportation costs).

You also need to look at your variable expenses, which can fluctuate but can still be tracked. These expenses can include any of the following:

• Childcare of eldercare expenses.
• Insurance costs.
• Grocery expenses.
• Pet food and care.
• Clothing expenses.
• Medical and dental expenses.
• Charitable donations.
• Credit card payments.

You can also allocate funds or any of the following discretionary expenses:

• Entertainment expenses (such as dining out, movies, and hobbies).
• Subscriptions (such as streaming services and memberships).
• Savings for vacations or fun money.

It can be a good idea to use a budgeting app or spreadsheet to help you categorize and track your expenses. That way, you can get a clear picture of your spending habits.

#5: Analyze Your Cash Flow

Once you have a clear picture of all your income sources and have estimated your expenses, you will need to look at your cash flow. Start by subtracting your estimated expenses from your income and interpreting the result. A positive number will indicate a potential surplus, while a negative number will suggest a possible deficit. A zero balance means that you’re breaking even.

If you have money left over after your expenses have been paid, think about adding a new category to your budget for any of these financial opportunities:

• Opening a special purpose or club account to save for a dream vacation, new car, graduation present, or home upgrade.
• Donating to a local non-profit or community organization.
• Taking care of future medical expenses with a Health Savings Account.
• Setting up an emergency fund and building a safety net for unexpected expenses.

A Money Market Share Account is a great way to manage your emergency fund. You will need to make a minimum deposit of $1,000, but it offers a higher rate of return than a traditional savings or checking account.

If you’re looking for a CPA in Corpus Christi to help you with your budget preparation, be sure to get in touch with Jennings & Hawley.

Most people think about hiring a CPA when it’s time to do their taxes, but there are many other reasons to get one. Whether it’s for handling personal or business finances, a good CPA can be an invaluable resource. Most entrepreneurs don’t start their journey with a great deal of knowledge about how to manage business finances, and almost all of them would welcome the expertise of a CPA when it’s time to file their taxes. This person can put you and your business on the path to financial success and help you find areas that need improvement.

The Difference Between a CPA and a Tax Preparer

While the IRS has an online database of people with a Preparer Tax Identification Number (PTIN), everyone can call themselves “tax preparers.” Anyone who wants to prepare a federal tax return for compensation must have a PTIN, but there are no education or experience requirements to get listed in the IRS database.

While not all tax preparers are CPAs, not all CPAs are tax preparers. But if you can find a CPA with experience in tax preparation, you can be sure it will be done accurately by someone with the right knowledge (which can save you both time and money). It can help you avoid any possible IRS penalties or audits later on, but the experience of a CPA goes beyond tax preparation.

Because of the educational demands and testing requirements that CPAs must be able to fulfill, they can help you with many different issues. This can include future tax planning, coming up with college or retirement savings plans, as well as taking care of various financial problems. A lot of CPAs have the Personal Financial Specialist credential, which means they have additional expertise in personal finance. So if you’re looking for someone who can help you throughout the year and not just during tax time, a CPA/PFS may be the person you need.

How to Find the Right CPA for Your Specific Needs

Not only do you have to think about what you need a CPA for, but you also need to think about the areas where this person can be helpful. A CPA will have experience in a number of areas, which can include the following:

• Retirement and education savings planning.
• Personal financial planning for your life goals.
• Proactive planning for all your financial concerns.
• Starting and running a business.
• International and multi-state tax planning.
• Financial planning for a side hustle.
• Interviewing prospective CPAs.

CPAs usually cultivate relationships with their clients over a long period of time, so you want to be sure you can find someone with whom you’ll enjoy working. Don’t be afraid to ask questions that can help you get a better understanding of whether they’re the right fit.

Questions You Should Ask a Prospective CPA

The first question you should ask is what type clients make up most of their practice, because you want to hire someone who works with people with needs that are similar to yours. You also want to ask them what type of services they offer to those clients, because you want to make sure they can do the kind of work you need them to do.

You want to know how they can help you save money and lower your tax bill. No CPA can give you a detailed answer without having specific information about your finances, but he or she should be able to talk about possible options that can help you improve your financial situation.

One of the biggest advantages of working with a CPA is that you can approach this person for a number of financial issues. So if you need advice in the future, you can ask them about their policies and availability. Most of them will be available throughout the year and will expect their work to extend beyond tax time.

CPAs will be happy to put you in touch with clients who can tell you about what it’s like to work with them, so be sure to ask them for any references. Those clients may have needs that are similar to yours or may be in similar industries. You also don’t want to be surprised when it’s time for a CPA to bill you, so you want to make sure both of you are clear about how much he or she will charge. That way, your relationship will start of on the right foot.

If you’re looking for a CPA in Corpus Christi to help you with your personal or business finances, be sure to reach out to Jennings & Hawley.

Figuring out how much money you need for retirement is like one of those word problems from high school that you’re still haunted by. It’s not an impossible equation to solve, but it won’t be a precise calculation. You should look at your retirement strategy at least once or twice a year to make sure you’re on the right track, and you should be ready to make adjustments if it isn’t. If you’re behind on your goals, there’s no need to worry because you can always catch up. But it’s important to take action.

Factors That Can Affect Your Retirement Planning

There is no “one size fits all” approach to retirement planning, and there are a number of factors that can determine how much you need for retirement. Some of them include the following:

• How long you will live — No one knows the answer to this question, but it’s still a good idea to look at some statistics. The average man who is 65 years old can expect to live 18.8 more years (which is almost to age 84), while the average woman of the same age can expect to live past her 86th birthday.
• When you plan to retire — This can have major impact on how much you need to save. The more you can postpone your retirement, the less you’ll need to save. Delaying your retirement can give your savings more time to grow. You’ll also have fewer years in retirement (in addition to more Social Security benefits).
• How you want to live when you retire — Do you believe your expenses will go down when you retire (what’s referred to as a “below average lifestyle”), or do you plan to spend as much as you do now (what’s considered to be “average”)? If you believe your expenses will be more than what they are now, it would be considered “above average.”
• How much you will earn on your savings — No one knows how stocks, bonds, or certificates of deposit will perform in the next 20 years.  Financial advisors often recommend caution when you’re estimating your portfolio returns. You should shoot for a 2.5% return after inflation, which would be about 5.5% today.

You should plan to save between 10% and 15% of your annual pretax income for retirement. But if you have a 401(k) or any other employer-sponsored retirement account and your employer matches your contributions, it can reduce the amount you need to save. It’s usually a good idea to contribute at least enough money to an employer-sponsored retirement plan to qualify for a full employer match.

Retirement Planning for Your Desired Lifestyle

You need to ask yourself what type of lifestyle you want to have when you retire. Do you want to travel the world, join a private country club, eat out at fancy restaurants, and participate in expensive hobbies? You may prefer to stay at home and live a more frugal lifestyle. Knowing the answer to these questions will go a long way in determining how much money you’ll need in your nest egg when you decide to retire.

You must also ask yourself where you want to live during your retirement years. You’ll need more retirement savings if you’re going to live in a city with a high cost of living instead of in a small rural area that isn’t as expensive. You should plan on needing between 70% and 80% of your pre-retirement income once you have retired, and you should consider the possibility of not having certain expenses that are often associated with working (such as commuting, purchasing work clothes, and eating out for lunch).

Retirement Planning and Social Security

You need to look at how much retirement income you may get from other sources besides your savings, which can include Social Security. You can get a current estimate of what your Social Security benefits could be at retirement by creating a personal Social Security account, but it’s only an estimate based on current law. So, there’s no guarantee that you’ll get that amount when you reach retirement age.

The Social Security Administration estimates that by 2033, the amount of payroll taxes being collected to fund Social Security will only be able to pay 79% of the scheduled benefits. But Social Security benefits aren’t meant to be your only source of retirement income. According to the Social Security Administration, it will only replace approximately 40% of the pre-retirement earnings of the average American.

If you’re looking for a CPA in Corpus Christi that can help you plan for retirement, be sure to reach out to Jennings Hawley & Co.

Raising children is expensive, with recent reports showing a cost of over $200,000 throughout their lifetime. The child tax credit (CTC) can give you some money back during tax time, which can be helpful in covering those costs. It allows low- and moderate-income families to reduce their tax liability by up to $2,000 for each child under the age of 17 if he or she is a citizen. Taxpayers must also meet certain income rules, because the credit phases out for people with a higher income. Once your modified adjusted gross income (MAGI) goes over the limit of your filing status, the credit amount may be smaller. You might even be considered ineligible.

How the Child Tax Credit Works

The value of the child tax credit is 15% of a household’s adjusted gross income (AGI) above the first $2,500 of earnings until it reaches the maximum of $2,000 per child. Up to $1,400 of the credit is refundable as an additional child tax credit (ACTC), which taxpayers can receive if they don’t owe any taxes. But it’s reduced by 5% after their adjusted gross income reaches $200,000 for single parents or $400,000 for married couples. There’s also a $500 non-refundable credit for non-child tax credit dependents.

To qualify for the credit, your child must meet several criteria based on age, relationship, support, dependency, citizenship, and residence. The child must be under 17 years of age, biologically related to you, be claimed by you as a dependent, and not provide more than 50% of his or her own financial support.

If you have children who are U.S. nationals or U.S. resident aliens, they can qualify if they have lived with you for more than half of the previous calendar year. Stepchildren and foster children may also qualify for the child tax credit if they meet certain requirements. The Tax Cuts and Jobs Act (TCJA) also requires parents to verify each eligible dependent with a valid Social Security Number.

The Impact of the Child Tax Credit

The child tax credit has helped many working families since it was enacted in 1997. But over the years, it has been criticized by many people who claim that it provides little or no benefit to the poorest families (most of whom aren’t taxpayers and don’t file tax returns). When the credit was expanded during the pandemic, it had important implications for the economy as a whole, especially with regard to low and moderate-income families.

Certain emergency members were put in place and included prepayment of these benefits to eligible taxpayers. Some efforts were also made to reach out to families with low incomes who didn’t normally file tax returns when it was time to mail out checks. But even before the pandemic, a number of amendments were made to increase the Child Tax Credit amount while also widening its eligibility requirements. Refunds used to be restricted to taxpayers with three or more children. But for years, these benefits didn’t reach the poorest families.

The expandable and fully refundable child tax credit was put in place as part of the American Rescue Plan Act, which was meant to provide relief to the economic problems created by COVID-19. It also addressed many of the limitations that were considered problematic in the earlier versions of the child tax credit. The increase in the credit and the provision of total refundability made it accessible to even the neediest families.

How to Claim the Child Tax Credit

You can claim the child tax credit by entering your children and any other dependents on your tax return and attaching a completed Schedule 8812 (Credits for Qualifying Children and Other Dependents). To qualify for this credit, the child must be under 17 years of age. The child must also be one of the following:

• Son or daughter.
• Eligible foster child.
• Brother or sister.
• Stepbrother or stepsister.
• Half-brother or half-sister.

The child can also be a descendant of one of the above (such as a grandchild, niece, or nephew). Additional requirements for the child tax credit also include the following:

• The child must not provide more than half of his or her own financial support for that year.
• The child must have lived with you for more than half of that year.
• The child must be properly claimed as a dependent on your tax return.
• The child must be a U.S. citizen, U.S. national, or U.S. resident alien.

If you’re looking for a CPA in Corpus Christi to help you answer your questions about the child tax credit, be sure to reach out to Jennings & Hawley.

The Internal Revenue Service (IRS) goes after taxpayers who are most likely to owe them money. They look for mistakes, omissions, and exaggerations that can trigger an audit. Some taxpayers are selected at random, but most of them are chosen because their computer-based Discriminant Information Function (DIF) scoring system has found one or more red flags. A lot of things can draw unwanted attention from the IRS. In some cases, it can be because you made a mistake. It can also be something that’s completely surprising and beyond your control (such as claiming a certain tax credit or the amount of income you reported).

Here are some of the common IRS audit triggers and how you can avoid them.

#1: Making Too Much Money

Millionaires have a much higher chance of getting audited. This is especially true today because of IRS funding from the Inflation Reduction Act of 2022, which is being used to increase enforcement actions against higher-income taxpayers. But it doesn’t mean you should make less money each year. Just don’t be surprised if the IRS decides to audit your return.

#2: Not Reporting Taxable Income

You’re inviting a response from the IRS if you don’t report all of your taxable income. The IRS gets a copy of all the W-2 and 1099 forms you get from employers and other people who pay you throughout the year. The IRS runs your tax return through a cross-checking program to see if you reported all the income that was shown on those forms.  If it finds a mismatch, you’ll get a letter from the IRS that points out the discrepancy. It will also ask you to follow additional procedures for resolving the issue.

This type of correspondence isn’t technically an “audit,” but it can feel like one. It can also lead to a full audit if the IRS doesn’t trust your numbers. Wait until you receive all your W-2 and 1099 forms before you file your tax return. Employers and other payers aren’t required to get W-2 and most 1099 forms sent out until Jan. 31, and most people complete their returns before that day (which can be a mistake). Don’t jump the gun by filing your tax returns before you have all your tax documents.

If you haven’t gotten your W-2 or 1099 form that you’re expecting or got an incorrect form, reach out to the employer or payer as soon as possible. If you have already contacted them but still didn’t get the missing or corrected forms, you can call the IRS at (800)829-1040 for help. You may end up having to estimate the W-2 or 1099 amount you need to report by using Form 4852.

#3: Math Errors

These types of issues would fall under the “stupid mistake” category. If you’re using tax software to complete your return, you most likely don’t have to worry about math errors because the program will make the calculations for you. But it’s easy to mess up the calculations if you’re using a paper return. Whether they’re intentional or done by mistake, math errors can cause your return to be flagged. If the IRS finds a miscalculation, they will fix the error and send you a notice of any adjustments that were made to your tax return. Once you have received this notice, you have 60 days to object to any increase in tax liability. But the worst part is that you may have to wait a little longer to get a tax refund while the IRS pulls your return to fix the mistake.

#4: Rounding or Estimating Dollar Amounts

This IRS audit trigger is easy to avoid. You might have rounded $403 of tip money to $400, $847 of student loan interest to $850, or $97 of medical expenses to $100. The IRS is going to see those numbers and think you’re making them up. If you decide to make up numbers by estimating your income or expenses, you can be sure to attract unwanted attention from the IRS. They get information about your tax situation from other sources. If it doesn’t match what you reported on your return, their computers are going to spit it out so it can be looked at more closely. If you’re rounding off or estimating certain dollar amounts, the IRS may start questioning everything else on your return. That could lead to a more intense audit. The good news is that this type of situation can be avoided by not rounding or estimating dollar amounts on your tax return.

If you’re looking for a CPA in Corpus Christi to help you with your tax returns, be sure to reach out to Jennings & Hawley.

Both accountants and CPA’s (Certified Public Accountants) are important to the operation of a business and they have an important distinctions. All CPA’s are accountants, but not all accountants are CPA’s. This is because of certain factors such as licensing, function, and skillset. An accountant has achieved a bachelor’s degree in accounting, while a CPA has completed specific educational and work requirements that are needed to pass a CPA exam (which are different for each state). A CPA is more likely to have extensive knowledge about the field of accounting than someone who has not earned this distinction. A CPA is also allowed to perform certain duties that regular accountants aren’t permitted to do.

What is an Accountant?

According to the U.S. Bureau of Labor Statistics (BLS), accountants and auditors help for-profit businesses, government agencies, and other organizations run more efficiently by looking at their financial records. They also make sure those records are accurate, assess an organization’s financial operations, and make sure that taxes are paid properly.

What is a CPA?

According to Becker Professional Education, all CPAs are accountants. But not all accountants are CPA’s. While they both perform similar roles in a business, a Certified Public Accountant (CPA) is an accounting professional who has met all the state licensing requirements to earn the CPA designation by acquiring a certain level of training, education, and experience (along with passing the CPA exam). So, the first step in understanding the difference between a CPA and accountant is to realize that a CPA is not a job title or career path. It’s a professional designation that will give accounting professionals more flexibility and mobility in their careers.

How are They Different?

Accountants and CPAs are different in several important areas, which include the following:

• Education — A bachelor’s degree in accounting or some other related field is usually all that’s needed to become an accountant or auditor. But once accountants have gained enough experience, they may decide to pursue other opportunities (such as getting a CPA certification, a graduate certification, or a master’s degree in accounting).
• Requirements — The skill requirements for a CPA and an accountant are similar, and they involve more than just being good with numbers. Aside from the education and experience, CPA’s must have a certain level of analytical and critical thinking. They must also have strong communication and organizational skills (all while being good with numbers).
• Licensing and Certification — Accountants don’t need to have any type of certification to work in the field, but there are certain accounting roles (such as internal auditing or managerial accounting) where a certification is preferable. CPA’s must meet strict licensing and certification requirements, which are overseen by the Board of Accountancy of each state. All states require CPAs to complete 150 semester hours of college coursework and pass the Uniform CPA Examination from the American Institute of Certified Public Accountants (which is broken into four parts).
• Responsibilities — The specific duties of an accountant will vary according to the type and size of the organization he or she is working for and the specific role he or she plays within it.  While the responsibilities of unlicensed accountants are like CPAs, they’re limited in certain areas. You must have a CPA certification to work as an external auditor, but they may not need it if they want to work as an internal auditor. Non-certified accountants also wouldn’t be able to represent their clients during IRS audits.

The differences between CPAs and accountants become clearer when you take a closer look at their job opportunities. Unlicensed accountants primarily work in the field of private accounting, and they may work internally for a public or private corporation. CPA’s may work in a variety of areas, which can include the following:

• Tax Accounting — They can help individuals and organizations file their annual tax returns and stay compliant with the IRS Code. They can also help clients understand the implications of any changes in the tax code and avoid certain tax burdens.
• External Auditing — They can offer an organization a third-party perspective by looking at its financial statements while also providing financial documentation. Audits may be performed on behalf of financial institutions, the treasury, or as part of a fraud investigation.

CPA’s must also work to keep their license by meeting continuing professional education requirements and by adhering to the standards listed in the AICPA’s Code of Professional Conduct. If you’re looking for a CPA in Corpus Christi to help you with all your accounting needs, be sure to reach out to Jennings & Hawley.

As your business grows, you hire more employees, and you take on more customers, keeping track of expenses and making sure your books are accurate will become harder and more time-consuming. You may be sick of staring at spreadsheets and teaching yourself how to use accounting software — all while you find yourself losing track of records. You might be worried about missing out on important deductions or overdue invoices. You may be thinking about hiring a professional bookkeeper, which can come with a number of benefits.

Here are some of the reasons why you should hire a professional for all the bookkeeping related to your business.

#1: It Will Save You Time

You can spend hours on bookkeeping and other financial tasks. But because it’s so time-consuming, you always leave it at the bottom of your to-do list. When tax deadlines start creeping up, you end up wasting a lot of valuable time trying to catch up. Any time you spend managing non-core activities (such as bookkeeping) is time you spend away from the growth of your business. But if you hire a professional bookkeeper, the time you would spend on those tasks can be spent on things that are more directly related to your business.

#2: You Won’t Miss Unpaid Invoices

Late and unpaid invoices can put a dent in your cash flow and your long-term business goals. A professional bookkeeper will be able to put a process in place that can help you stay on top of your invoices. Some of them can include the following:

• Sending out reminders if a bill is late.
• Making phone calls.
• Issuing a late fee penalty.

They can also stay on top of late or forgotten payments, so you won’t have to worry about not fulfilling your financial obligations.

#3: You Can Identify Any Cash Flow Issues

Because your bookkeeper will keep daily records of invoices, receipts, and other financial transactions, he or she will have a clear picture of your income and expenses. This can help you understand your business performance and identify any cash flow issues as they come up.

#4: You Can Focus on Growing Your Business

Having a good understanding of your income and expenses each month will help you get a handle on your financial situation. You will also be able to identify spending patterns and sales trends. A tax professional and bookkeeper can help you make better business decisions about your day-to-day operations (such as which time of year is best to make large purchases). You’ll be able to forecast seasonal ups and downs, make sure you have access to capital during slow periods, and avoid taking too much money during the strong months. Having a greater awareness of your spending will help you control and lower your operating expenses whenever it’s possible, which can save you money over the long term.

#5: Tax Season Will Be Smoother

If you hire a bookkeeper from the same company that employs your tax specialist, they can work together to make sure you have an update of your accounting records and return filings. They will also be able to give you an interim or year-end financial statement, which will give you a clearer picture of your business’s financial health (in addition to an advance view of what your tax obligations may be). You can use this information to make decisions that could modify or lower your tax bill.

#6: You’ll Be Better Prepared for an Audit

If your business is audited by the IRS, having accurate and up-to-date records will make sure the process goes smoothly. The sooner you get back to running your business, the better things will be. If you’re concerned about being audited, a professional bookkeeper will be your best defense. Without having good records to support your tax return, non-income items can be taxed as income and legitimate business expenses may not be deducted.

#7: It Will Be Easier to Secure Loans from Banks and Other Creditors

Creditors need to have accurate information about the financial position of your business before they can give you a loan, and having good records will show them that you know every aspect of your company. You’ll have an easier time securing capital when you’re able to outline your past performance, because banks and other lenders need to make sure you have a solid history and a firm grasp of your business’s finances.

If you’re looking for a CPA in Corpus Christi who can help you get a better handle on your business’s bookkeeping, be sure to reach out to Jennings & Hawley.

Filing taxes can be a daunting task, even for the most financially savvy individuals. With changing laws, complex forms, and various deductions and credits to consider, it’s easy to make mistakes that can lead to penalties or missed opportunities for savings. Here’s a comprehensive guide to help you avoid common tax filing mistakes and ensure your tax return is accurate and maximized for your benefit.

1. Missing the Filing Deadline

One of the most straightforward mistakes to avoid is missing the tax filing deadline. In the United States, Tax Day typically falls on April 15th. Missing this deadline can result in late filing penalties and interest on any unpaid taxes. If you know you won’t be able to file on time, request an extension using IRS Form 4868, which will give you an additional six months to file your return. However, remember that an extension to file is not an extension to pay any taxes owed.

2. Incorrect or Missing Information

Ensuring that your tax return contains accurate and complete information is crucial. Here are some details to double-check:

• Social Security Numbers (SSNs): Verify that SSNs for you, your spouse, and any dependents are correct.
• Names: Use the exact names as they appear on your Social Security cards.
• Filing Status: Choose the correct filing status (e.g., single, married filing jointly, head of household).
• Bank Account Numbers: If you opt for direct deposit, ensure your bank routing and account numbers are correct to avoid delays in receiving your refund.

3. Mathematical Errors

Math errors are a common mistake on tax returns. Even a simple addition or subtraction error can lead to an incorrect tax amount. Using tax preparation software or hiring a tax professional can help minimize these errors. If you’re filing manually, take your time to double-check your calculations.

4. Failing to Report All Income

All income earned must be reported on your tax return, not just your primary salary or wages. This includes income from freelance work, rental properties, investments, and any side gigs. Common forms of income that are sometimes overlooked include:

• 1099 Forms: Income from freelance or contract work.
• Interest and Dividends: Income from savings accounts, investments, and dividends.
• Gambling Winnings: Any earnings from gambling activities.
• Alimony: Received alimony payments (for divorces finalized before 2019).

5. Overlooking Deductions and Credits

Tax deductions and credits can significantly reduce your taxable income and the amount of tax you owe. However, many taxpayers overlook or incorrectly claim these benefits. Here are some commonly missed deductions and credits:

• Student Loan Interest Deduction: Up to $2,500 of student loan interest can be deducted.
• Education Credits: The American Opportunity Credit and Lifetime Learning Credit can provide valuable tax savings for those pursuing higher education.
• Earned Income Tax Credit (EITC): This credit is available to low- to moderate-income workers and can be worth thousands of dollars.
• Medical Expenses: Deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI).

6. Not Keeping Proper Documentation

Proper documentation is essential for substantiating the information on your tax return. Keep records of:

• Income: W-2s, 1099s, and other income statements.
• Expenses: Receipts, bank statements, and invoices for deductible expenses.
• Charitable Contributions: Acknowledgment letters from charitable organizations and receipts for donated items.
• Investment Transactions: Statements showing the purchase and sale of investments.

Maintaining organized records throughout the year can simplify the filing process and protect you in case of an audit.

7. Incorrectly Claiming Dependents

Claiming dependents incorrectly can lead to significant issues with your tax return. Ensure you are eligible to claim a dependent by reviewing the IRS guidelines. Common mistakes include:

• Divorced or Separated Parents: Only one parent can claim a child as a dependent in a given year. The IRS typically awards the dependency exemption to the custodial parent unless a waiver (Form 8332) is provided.
• Qualifying Relatives: Ensure that relatives claimed as dependents meet the IRS requirements for support, residency, and relationship.

8. Ignoring the Alternative Minimum Tax (AMT)

The Alternative Minimum Tax (AMT) is designed to ensure that high-income earners pay a minimum amount of tax. If you fall into a higher income bracket, you may be subject to the AMT. Tax software can help calculate your AMT liability, or you can use IRS Form 6251 to determine whether you owe AMT.

9. Failing to Sign and Date Your Return

It might seem like a minor detail, but failing to sign and date your tax return can result in the IRS rejecting it. If you’re filing jointly, both you and your spouse must sign. Electronic filers should use the appropriate PIN or sign digitally as instructed.

10. Neglecting to Pay Estimated Taxes

If you are self-employed or have significant income not subject to withholding, you may need to pay estimated taxes quarterly. Failure to do so can result in penalties. Use IRS Form 1040-ES to calculate and make estimated tax payments.

11. Overlooking State Tax Obligations

In addition to federal taxes, remember to file your state tax return if your state has an income tax. Each state has its own deadlines, forms, and rules, so make sure to comply with your state’s requirements.

Avoiding these common tax filing mistakes can save you time, money, and stress. Whether you choose to file your taxes yourself or hire a professional, staying informed and organized is key. Always double-check your information, keep thorough records, and take advantage of available deductions and credits to ensure a smooth and accurate tax filing experience. By taking these steps, you can minimize errors, maximize your refund, and stay compliant with tax laws.