Economics Finance

The work of preparing and filing your tax return is relatively easier than defending your return in the event of tax audits. Around 1.5 million taxpayers face tax audit every year. There is no ideal formula to avoid tax audit but you can look out for red flags.

Here are top 10 red flags which may trigger tax audits -

1. Unreasonable deductions for home office – If you operate your business from home, you are tempted to deduct most of your spending as business expenditure. There are specific rules published by IRS to classify business and personal expenditure. If you miss out on some of them, you are inviting a tax audit.

2. Mismatching your Federal and state tax returns – If there is a difference between the incomes declared on these two tax returns, it will be immediately picked up by IRS computers and you will soon get a notice for tax audit.

3. High earnings – If your annual income crosses $100,000, it may attract the attention of IRS.

4. Excessive charitable contributions – If your contributions to charity range between 5 to 10 percent of your income, IRS feel it is a good reason to ask you explanation.

5. Mess up in alternative minimum tax (AMT) – If you are subject to AMT, you should approach a tax professional in order to avoid calculation mistakes. Even if you feel to submit AMT schedule, you become prominent to attract attention of IRS. Continue reading ‘Top 10 Red Flags Which Show the Danger of Tax Audits’ »

Being a public trust is not an easy task, transparency is always expected in that matter, thus, I could say, that as a Certified Public Accountant is also not that an easy job. A Certified Public Accountant (CPA) is qualified professional accountant being certified by the state that he or she is capable for corporate accounting, tax audits as well as small business consulting. In order to become a public accountant, there are things that are so important to follow, and these would include that a person must undergo an intense college education in various business, finance and accounting subjects, and the most important is to pass the 14-hour CPA examination which deals with the topics like auditing, accounting, business management, and especially business laws and regulations including tax.

That is how difficult it is to grab such certification. One must need to sweat before having a nice relax. Being a Certified Public Accountant is always considered as a very rewarding position, because if we are going to talk about pressures, you can find it there, yet being a CPA can create a difference in ones life. You can earn a good salary and a good job in the world of business, because once a CPA finished the long tenure of education and pass its tedious trainings, they can already avail the most rewarding jobs in the business scenario. Still, the certification says it all; it is just a matter of sacrifice in order to be certified. Almost all businesses and organizations nowadays, it may be big or small, they always hire CPAs to supervise their accounting systems, their taxation procedures, and the most important aspect is their financial flow. Continue reading ‘Certified Public Accountant – A Public Trust’ »