Sleuthing your way through a tax audit by yourself is not the same as fixing a leaky faucet or changing your oil. Here are reasons to seek professional help as soon as you receive a letter from the IRS:
IRS auditors do this for a living – you don’t. Seasoned IRS agents have seen your situation many times and know the rules better than you. Even worse, they are under no obligation to teach you the rules. Just like a defendant needs the help of a lawyer in court, you need someone in your corner that knows your rights and understands the correct tax code to apply in correspondence with the IRS.
Insufficient records will cost you. When selected for an audit, the IRS will typically make a written request for specific documents they want to see. The list may include receipts, bills, legal documents, loan agreements and other records. If you are missing something from the list, things get dicey. It may be possible to reconstruct some of your records, but you might have to rely on a good explanation to avoid additional taxes plus a possible 20 percent negligence penalty.
Too much information can add audit risk. While most audits are limited in scope, the IRS agent has the authority to increase that scope based on what they find in their original review. That means that if they find a document or hear something you say that sounds suspicious, they can extend the audit to additional areas. Being prepared with the proper support and concise, smart answers to their questions is the best approach to limiting further audit risk.
Missing an audit deadline can lead to trouble. When you receive the original audit request, it will include a response deadline (typically 30 days). If you miss the deadline, the IRS will change your tax return using their interpretation of findings, not yours. This typically means assessing new taxes, interest and penalties. If you wish your point of view to be heard — get help right away to prepare a plan and manage the IRS deadlines.
Tax audits are never fun, but they don’t have to be pull-your-hair-out stressful. Mapping out a plan and taking it step-by-step ensures the best possible outcome. With help, you’ll rest easy knowing your audit situation is being handled with the proper expertise by someone that also has your best interests in mind.
With all the complexity in the tax code today, it is easy to put off taking a look at your situation. On the other hand, time is on your side to implement some great tax savings ideas.Here are several strategies to consider during a midyear tax review:
Create a midyear sort of tax records. Good recordkeeping is one of the best ways to protect valuable tax deductions. Maintain documentation for expenses such as charitable donations, childcare costs, medical expenses, business mileage, travel expenses and gambling losses. Establishing a reliable system now can save time and stress later. Also consider taking advantage of the new above the line charitable donation of up to $1,000 ($2,000 if married) while there is still plenty of time.
Boost retirement savings. Retirement contribution limits remain generous, giving you an opportunity to increase tax-advantaged savings before year-end. For 2026, eligible taxpayers can contribute up to the annual IRS limit for employer-sponsored retirement plans and IRAs, with additional catch-up contributions available for individuals age 50 and older. Increasing contributions may lower taxable income while helping strengthen long-term financial security.
Review education savings options. If you’re saving for a child’s education in a regular investment account, consider whether a 529 education savings plan could provide tax advantages. Earnings in these accounts grow tax-deferred, and withdrawals are generally tax-free when used for qualified education expenses. Starting earlier allows more time for potential tax-advantaged growth.
Update withholding and estimated taxes. Major life changes such as marriage, divorce, a new job or changes in income can affect how much tax you should be paying throughout the year. Reviewing your withholding and estimated tax payments now may help you avoid underpayment penalties or an unexpectedly large balance due next spring. At the same time, avoiding overpayment can improve cash flow during the year.
A proactive tax review can help uncover opportunities and minimize costly mistakes. Please call if you would like assistance with year-end tax planning strategies tailored to your situation.
Money touches nearly every part of our lives, yet many people are surprised by how common certain financial behaviors actually are. Here are 7 interesting financial facts that highlight real trends in personal finance, along with practical tips to help you make smarter decisions.
Fact #1: 46% of Americans with credit cards carry a balance from month-to-month. Nearly half of credit card users revolve a balance at some point during the year. Carrying a balance means paying interest, which can often exceed 20% annually.
Financial tip: Use credit cards like a debit card. Only charge what you can pay off in full each month. If you already carry a balance, consider the avalanche method – pay extra toward the card with the highest interest rate while making minimum payments on the others.
Fact #2: 73% of taxpayers receive a tax refund each year. While a refund can feel like a financial windfall to some, it actually represents an interest-free loan to the government.
Financial tip: Consider adjusting your tax withholding if your refund is very large. Take the extra money in your paychecks and redirect it into savings or investments.
Fact #3: Americans hold over $1.67 trillion in auto loan debt. With rising car prices, more buyers rely on financing, often stretching loan terms to keep monthly payments manageable.
Financial tip: When buying a car, focus on the total cost rather than just the monthly payment. Shorter loan terms and larger down payments can significantly reduce the interest you pay over time.
Fact #4: 40% of U.S. homeowners own their homes without a mortgage. A growing share of homeowners have fully paid off their homes.
Financial tip: Even if paying off your mortgage early is appealing, balance this goal with other priorities such as retirement savings and emergency funds.
Fact #5: U.S. households owe about $18.8 trillion in total debt. Mortgage debt accounts for the majority of this amount, followed by auto loans, student loans, and credit cards. Debt can help people achieve major life goals like homeownership or education, but too much can limit financial flexibility.
Financial tip: Track your debt-to-income ratio. While having no debt is the ideal situation, keeping monthly debt payments below about one third of your income can help maintain some financial stability.
Fact #6: 67% of Americans have little to no savings after each paycheck. Rising housing costs, inflation, and everyday expenses have made it difficult for many households to build savings.
Financial tip: Start with small, automatic savings. Even setting aside a small amount from each paycheck can build meaningful financial security over time.
Fact #7: 54% of working-age Americans have some form of post-secondary education. More than half of U.S. adults have continued their education beyond high school through a variety of paths – including four-year colleges, community colleges, trade schools, technical programs, and professional certifications.
Financial tip: If you’re considering additional education or training, evaluate the return on investment before committing. Sometimes shorter programs, certifications, or trade schools can provide strong earning potential with significantly lower costs than a traditional four-year degree.
Tax credits are some of the most valuable tools around to help cut your tax bill. But figuring out how to use these credits on your tax return can get complicated very quickly. Here’s what you need to know.
Understanding the difference
To help illustrate the difference between a credit and a deduction, here is an example of a single taxpayer making $50,000 in 2025.
Tax Deduction Example: Gee I. Johe earns $50,000 and owes $5,000 in taxes. If you add a $1,000 tax deduction, he’ll decrease his $50,000 income to $49,000, and owe about $4,800 in taxes.
Result: A $1,000 tax deduction decreases Gee’s tax bill by $200, from $5,000 to $4,800.
Tax Credit Example: Now let’s assume Gee has a $1,000 tax credit versus a deduction. Gee’s tax bill decreases from $5,000 to $4,000, while his $50,000 income stays the same.
Result: A $1,000 tax credit decreases your tax bill from $5,000 to $4,000.
In this example, your tax credit is five times as valuable as a tax deduction.
Credits are usually worth more
Credits are generally worth much more than deductions. However there are several hurdles you have to clear before being able to take advantage of a credit.
To illustrate, consider the popular child tax credit.
Hurdle #1: Meet basic qualifications
You can claim a $2,200 tax credit for each qualifying child you have on your 2025 tax return. The good news is that the IRS’s definition of a qualifying child is fairly broad, but there are enough nuances to the definition that Hurdle #1 could get complicated. And then to make matters more complicated…
Hurdle #2: Meet income qualifications
If you make too much money, you can’t claim the credit. If you’re single, head of household or married filing separately, the child tax credit completely goes away if you exceed $240,000 of taxable income. If you’re married filing jointly, the credit disappears above $440,000 of income.
Hurdle #3: Meet income tax qualifications
To claim the entire $2,200 child tax credit, you must owe at least $2,200 of income tax. For example, if you owe $3,000 in taxes and have one child that qualifies for the credit, you can claim the entire $2,200 credit. But if you only owe $1,000 in taxes, the maximum amount of the child tax credit you can claim is $1,700.
Take the tax credit…but get help!
The bottom line is that tax credits are usually more valuable than tax deductions. But tax credits also come with lots of rules that can be confusing. Please call to schedule a tax planning session to make sure you make the most of the available tax credits for your situation.
Filing your 2025 tax return may feel like crossing a finish line. In reality, this moment is the starting point for smart tax planning during 2026. Here are several ideas to kick start your own tax planning cycle.
If you get a big refund, adjust your withholdings. A large refund may feel rewarding, but it often means you gave the government an interest-free loan all year. This money could have supported debt reduction, savings, or investments, instead. After filing, revisit your Form W-4 and run a projection for 2026. Fine-tuning your withholding improves monthly cash flow and reduces the likelihood of over-correcting later in the year.
If you have a big tax bill, review estimated tax payments. A significant balance due is more than an inconvenience. It may signal under-withholding or insufficient quarterly estimates. Early in the year is the ideal time to correct course. Review income sources, especially self-employment, investment, or bonus income, and adjust estimated payments accordingly.
Plan now to take advantage of the $1,000 above-the-line charitable donation deduction. With an above-the-line charitable deduction available ($2,000 for married couples), thoughtful giving becomes even more strategic. Consider your cash flow to optimize the timing of donations. Spreading contributions across the year may make budgeting easier, while ensuring you fully utilize the deduction.
Review retirement contribution limits for 2026. Confirm contribution limits for IRAs, 401(k)s, and other qualified plans for 2026, and evaluate whether you can increase deferrals. Even modest monthly adjustments can significantly reduce taxable income over the course of a year. Starting early also makes it easier to reach maximum contribution thresholds without straining year-end cash flow.
Plan HSA contributions and medical expenses. Health Savings Accounts offer a rare triple tax benefit – deductible contributions, tax-free growth, and tax-free qualified withdrawals. Review eligibility, contribution limits, and anticipated medical expenses for 2026. Coordinating planned procedures, prescriptions, or ongoing care with your funding strategy can enhance the tax benefit while keeping healthcare spending organized and predictable.
Take into account life events. Major life changes often reshape your tax profile. Marriage can alter filing status and bracket exposure. Divorce may affect dependency claims and support payments. A new child can unlock credits and deductions. Anticipating these shifts allows you to update withholding, adjust estimated payments, and plan eligibility for credits before the year unfolds.
Pay attention to no tax on tips and overtime. Accurate tracking becomes essential if you receive tip and/or overtime income. Confirm how your employer reports this income and ensure payroll systems reflect proper treatment. Employers and business owners must also review compliance procedures. Understanding how these earnings are classified early in the year helps prevent reporting errors and maximizes any available benefit.
The most effective tax strategies are built early. Use your filed 2025 tax return as a starting point, make adjustments now, and give your 2026 plan room to work in your favor.
This year marks 250 years of American independence, which also means two-and-a-half centuries of spirited debate over taxes. From the nation’s earliest days, revenue has been raised in inventive, controversial, and occasionally head-scratching ways, often followed closely by creative attempts to avoid it. To mark this anniversary, our annual tax quiz explores the lesser-known, stranger corners of U.S. tax history.
In the 1790s, the federal government imposed a tax that sparked armed resistance in western Pennsylvania. What was the tax actually on?
A. Horse ownership B. Whiskey distillation C. Imported tea D. Playing cards
B – The Whiskey Tax wasn’t aimed at casual drinkers but at distillers, many of whom were small frontier farmers turning grain into shelf-stable income. To them, the tax felt like a coastal money grab, and protests escalated into the Whiskey Rebellion. George Washington personally led troops to put it down, proving two things early on – the federal government would enforce tax laws, and Americans would complain loudly about them.
During the Civil War, Congress briefly experimented with a federal income tax. What was one unexpected thing taxpayers were allowed to deduct?
A. Bribes paid to avoid the draft B. The cost of hired farm labor C. Losses from shipwrecks D. Beard-grooming expenses
C – Shipwreck losses. In an era when commerce moved by sea and river, losing a shipment to a wreck was a real business risk. The government recognized this long before it figured out depreciation schedules or standardized forms. Sadly for the bearded, personal grooming never made the cut.
In the early nineteenth century, tariffs were the federal government’s main revenue source. Which item was once considered so politically dangerous to tax that it helped trigger a constitutional crisis?
A. Wool coats B. Iron nails C. Imported hats D. Cheap British textiles
D – Cheap British textiles. Protective tariffs raised prices on imported cloth to support American manufacturers, but Southern states relied heavily on imports and exports. The resulting tariff fights fueled the Nullification Crisis, where South Carolina flirted with ignoring federal law entirely. It turns out fabric can tear a nation, metaphorically and almost literally.
Before payroll withholding existed, how did many Americans pay their income taxes during World War II?
A. By mailing cash in envelopes B. Through quarterly visits from IRS agents C. In a single painful lump sum D. With war bonds only
C – One lump sum. Taxpayers were expected to save throughout the year and then pay all at once, which went about as well as you’d expect. Withholding was introduced partly to fund the war efficiently and partly to stop widespread shock, confusion, and strongly worded letters to Washington, D.C.
In 1895 the Supreme Court ruled a federal income tax was unconstitutional. What was the main reason?
A. It unfairly targeted farmers B. It violated states’ rights C. It wasn’t apportioned among the states D. Congress forgot to define income
C – Apportionment. The Constitution required certain taxes to be divided among states based on population, not income. The income tax didn’t do that, so it failed on technical grounds. The 16th Amendment later fixed this, proving that sometimes the solution to tax problems is more paperwork at the federal level.
At various points in U.S. history, Congress has taxed purely to change behavior rather than raise money. Which of these was explicitly intended to discourage its use?
A. Colored margarine B. Wooden houses C. Cheap paper D. Public theaters
A – Colored margarine. To protect dairy farmers, from the 1880s to 1950 Congress taxed margarine that was artificially colored to look like butter. The result was grayish margarine and widespread consumer resentment. Eventually, common sense – and better food science – prevailed.
How Did You Score?
5 – 6 correct: You could probably audit the 18th century. Historians salute you, accountants trust you, and the IRS would like to know your availability for consulting.
3 – 4 correct: You may not be ready to draft tax policy, but you’d absolutely survive a colonial tavern debate about whiskey taxes.
1 – 2 correct: Consider this your official introduction to the wonderfully strange world of U.S. tax history, and a reminder that some of these questions would have puzzled people in the actual centuries they happened.
