Accounting & Tax FAQs — Common Questions Answered | VERDE ONE

Question 1

What is the difference between a CPA and a tax preparer?

Accepted Answer

A CPA (Certified Public Accountant) is a licensed professional who has passed the CPA exam and meets ongoing education requirements. CPAs can represent you before the IRS, provide audit services, and offer strategic tax planning. A tax preparer may have limited credentials and is primarily focused on preparing returns. For complex situations, a CPA provides significantly more value.

Question 2

What are the most commonly missed tax deductions?

Accepted Answer

Commonly missed deductions include home office expenses, vehicle mileage for business use, professional development and education, health insurance premiums for self-employed individuals, retirement plan contributions, and charitable contributions (including non-cash donations). A local CPA can review your situation and identify deductions specific to your circumstances.

Question 3

When are quarterly estimated taxes due?

Accepted Answer

Federal estimated tax payments are due four times per year: April 15, June 15, September 15, and January 15 of the following year. Illinois state estimated taxes follow the same schedule. Self-employed individuals, business owners, and those with significant investment income typically need to make estimated payments to avoid underpayment penalties.

Question 4

What business structure is best for tax purposes?

Accepted Answer

The optimal business structure depends on your specific situation. S-Corps can reduce self-employment taxes for profitable businesses. LLCs offer flexibility. Sole proprietorships are simplest but offer no liability protection. The "best" structure balances tax efficiency, liability protection, and administrative burden. A CPA can model the tax impact of different structures for your specific income level.

Question 5

How long should I keep tax records?

Accepted Answer

The IRS generally has 3 years to audit a return, so keeping records for at least 3 years is the minimum. However, keep records for 6 years if you underreported income by more than 25%, and indefinitely for fraudulent returns or unfiled returns. Business records related to assets should be kept until the asset is disposed of, plus 3 years.

Question 6

What is the standard deduction vs. itemizing?

Accepted Answer

The standard deduction for 2026 is $15,000 for single filers and $30,000 for married filing jointly. Itemizing makes sense only if your deductible expenses (mortgage interest, state taxes up to $10,000, charitable contributions, etc.) exceed the standard deduction. Most taxpayers benefit from the standard deduction, but a CPA can determine which approach saves you more.

Question 7

How can a small business reduce its tax burden?

Accepted Answer

Key strategies include maximizing retirement plan contributions (SEP-IRA, Solo 401(k)), timing income and expenses, taking advantage of Section 179 expensing, deducting all legitimate business expenses, and choosing the right business structure. Year-round tax planning with a CPA consistently produces better results than last-minute preparation.

Question 8

What happens if I get audited by the IRS?

Accepted Answer

An IRS audit is a review of your tax return to verify accuracy. Most audits are conducted by mail and focus on specific items. If you receive an audit notice, don't panic — respond promptly, gather documentation, and consider working with a CPA who can represent you before the IRS. Having a professional handle the correspondence significantly reduces stress and often produces better outcomes.

Accounting FAQs

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Accounting and Tax Frequently Asked Questions

Accounting FAQs

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