• Staff Accountant, responsible for auditing and reviewing financial statements
• Specializes in Accounting and Tax Services

Experience

• Joined Burkett, Burkett & Burkett CPAs, P.A. in May 2023
• Served as Accounting Intern at Burkett, Burkett & Burkett CPAs, P.A. January-May, 2023

Professional and Civic Activities

• South Carolina Association of Certified Public Accountants – Member

Education

• Columbia College – Columbia, SC
  • Bachelors of Science in Accounting, Summa Cum Laude

Interesting Facts

• Born and raised in South Carolina
• Resides in West Columbia, South Carolina
• Hobbies include: Hiking, traveling, and painting

The post Kristina Southern first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

The IRS recently released its audit statistics for the 2022 fiscal year and fewer taxpayers had their returns examined as compared with prior years. But even though a small percentage of returns are being chosen for audits these days, that will be little consolation if yours is one of them.

Recent statistics

Overall, just 0.49% of individual tax returns were audited in 2022. However, as in the past, those with higher incomes were audited at higher rates. For example, 8.5% of returns of taxpayers with adjusted gross incomes (AGIs) of $10 million or more were audited as of the end of FY 2022.

However, audits are expected to be on the rise in coming months because the Biden administration has made it a priority to go after high-income taxpayers who don’t pay what they legally owe. In any event, the IRS will examine thousands of returns this year. With proper planning, you may fare well even if you’re one of the unfortunate ones.

Be ready

The easiest way to survive an IRS examination is to prepare in advance. On a regular basis, you should systematically maintain documentation — invoices, bills, canceled checks, receipts or other proof — for all items reported on your tax returns.

Keep in mind that if you’re chosen, it’s possible you didn’t do anything wrong. Just because a return is selected for audit doesn’t mean that an error was made. Some returns are randomly selected based on statistical formulas. For example, IRS computers compare income and deductions on returns with what other taxpayers report. If an individual deducts a charitable contribution that’s significantly higher than what others with similar incomes report, the IRS may want to know why.

Returns can also be selected if they involve issues or transactions with other taxpayers who were previously selected for audit, such as business partners or investors.

The government generally has three years from when a tax return is filed to conduct an audit, and often the exam won’t begin until a year or more after you file a return.

Tax return complexity

The scope of an audit generally depends on whether it’s simple or complex. A return reflecting business or real estate income and expenses will obviously take longer to examine than a return with only salary income.

In FY 2022, most examinations (78.6%) were “correspondence audits” conducted by mail. The rest were face-to-face audits conducted at an IRS office or “field audits” at the taxpayers’ homes, businesses, or accountants’ offices.

Important: Even if you’re chosen, an IRS examination may be nothing to lose sleep over. In many cases, the IRS asks for proof of certain items and routinely “closes” the audit after the documentation is presented.

Get professional help

It’s prudent to have a tax professional represent you at an audit. A tax pro knows the issues that the IRS is likely to scrutinize and can prepare accordingly. In addition, a professional knows that in many instances IRS auditors will take a position (for example, to disallow certain deductions) even though courts and other guidance have expressed contrary opinions on the issues. Because pros can point to the proper authority, the IRS may be forced to concede on certain issues.

Contact us if you receive an IRS audit letter or simply want to improve your recordkeeping.

The post The Best Way to Survive an IRS Audit Is to Prepare first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

If you operate a business, or you’re starting a new one, you know you need to keep records of your income and expenses. Specifically, you should carefully record your expenses in order to claim all of the tax deductions to which you’re entitled. And you want to make sure you can defend the amounts reported on your tax returns in case you’re ever audited by the IRS.

Be aware that there’s no one way to keep business records. But there are strict rules when it comes to keeping records and proving expenses are legitimate for tax purposes. Certain types of expenses, such as automobile, travel, meals and home office costs, require special attention because they’re subject to special recordkeeping requirements or limitations.

Here are two recent court cases to illustrate some of the issues.

Case 1: To claim deductions, an activity must be engaged in for profit 

A business expense can be deducted if a taxpayer can establish that the primary objective of the activity is making a profit. The expense must also be substantiated and be an ordinary and necessary business expense. In one case, a taxpayer claimed deductions that created a loss, which she used to shelter other income from tax.

She engaged in various activities including acting in the entertainment industry and selling jewelry. The IRS found her activities weren’t engaged in for profit and it disallowed her deductions.

The taxpayer took her case to the U.S. Tax Court, where she found some success. The court found that she was engaged in the business of acting during the years in issue. However, she didn’t prove that all claimed expenses were ordinary and necessary business expenses. The court did allow deductions for expenses including headshots, casting agency fees, lessons to enhance the taxpayer’s acting skills and part of the compensation for a personal assistant. But the court disallowed other deductions because it found insufficient evidence “to firmly establish a connection” between the expenses and the business.

In addition, the court found that the taxpayer didn’t prove that she engaged in her jewelry sales activity for profit. She didn’t operate it in a businesslike manner, spend sufficient time on it or seek out expertise in the jewelry industry. Therefore, all deductions related to that activity were disallowed. (TC Memo 2021-107)

Case 2: A business must substantiate claimed deductions with records

A taxpayer worked as a contract emergency room doctor at a medical center. He also started a business to provide emergency room physicians overseas. On Schedule C of his tax return, he deducted expenses related to his home office, travel, driving, continuing education, cost of goods sold and interest. The IRS disallowed most of the deductions.

As evidence in Tax Court, the doctor showed charts listing his expenses but didn’t provide receipts or other substantiation showing the expenses were actually paid. He also failed to account for the portion of expenses attributable to personal activity.

The court disallowed the deductions stating that his charts weren’t enough and didn’t substantiate that the expenses were ordinary and necessary in his business. It noted that “even an otherwise deductible expense may be denied without sufficient substantiation.” The doctor also didn’t qualify to take home office deductions because he didn’t prove it was his principal place of business. (TC Memo 2022-1)

We can help

Contact us if you need assistance retaining adequate business records. Taking a meticulous, proactive approach can protect your deductions and help make an audit much less difficult.

The post Keeping Meticulous Records Is the Key to Tax Deductions and Painless IRS Audits first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

IRS gives taxpayers more time to make expensing election deductions

Due to taxpayer confusion about making expensing elections, the IRS announced that taxpayers may make these elections on amended returns for tax years beginning after 2014 for any eligible property during which the property went into service during that tax year.

IRS releases next year’s inflation adjustments for health savings accounts (HSAs)

For 2018, the individual deduction limit for an HSA is $3,450 for individuals with self-only coverage and $6,900 for individuals with family coverage. Each of these limits increases by $1,000 if the individual is 55 or older.  Beginning in 2018, an HDHP is a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage.Additionally, annual out-of-pocket expenses must not exceed $6,650 for self-only coverage or $13,300 for family coverage.

IRS’s private debt collection program kicks off

Beginning in April the IRS began notifying individuals with overdue federal tax that their accounts were being assigned to one of four private collection agencies (PCAs). They also warned taxpayers to be wary of scammers posing as PCAs, cautioning that any legitimate calls would focus on debts the taxpayers would have been aware of for a number of years and would have been contacted by the IRS in writing about in the past.

Reissued proposed regulations explain new partnership uniform audit rules

After a “regulatory freeze” earlier this year, the IRS has now reissued proposed regulations explaining new partnership uniform audit rules related to The Bipartisan Budget Act of 2015.

Healthcare bill moves through Congress

On July 13, the Senate leadership released its healthcare draft bill, the Better Care Reconciliation Act of 2017 (BCRA), as amended, for consideration. The bill failed in the Senate several weeks later. As of the publishing of this article, no further movement has been made towards repealing or replacing the ACA, but we will provide updates as they are available.

Call Burkett Burkett & Burkett, Certified Public Accountants, P.A. with any questions you may have or for assistance navigating these changes. Read the full article here.

The post Key Tax Developments, Quarter 2, 2017 first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

• Manager
• Supervises and performs financial statement and compliance audits, reviews, compilations and agreed upon procedures; prepares Form 990 with related schedules; performs CFO and Controller temporary services; consults with QuickBooks implementation and training. These services are provided to small to medium size privately held companies and non-profit organizations.

Experience

Public Accounting

• Senior Accountant with Burkett, Burkett & Burkett in Rock Hill, SC
• Staff Accountant with Leatherbury-Broache & Co., P.C. in Accomac, VA

Private Industry

• Client Service Director & Consultant with Robert Half International (Management Resources Division) in Charlotte, NC
• Controller with IMBU (formerly AirDye Solutions, LLC) in Harrisonburg, VA and Charlotte, NC
• CFO & Controller with Baysys Technologies, LLC in Wallops Island, VA
• Accounting Manager with Interstable, Inc. in Dallas, TX
• Senior Accountant with DeRoyal Industries, Inc. in Knoxville, TN

Professional and Civic Activities

• American Institute of Certified Public Accountants
• South Carolina Association of Certified Public Accountants
• Old Town Association – Board Member

Education

• Dallas Theological Seminary—Graduated May 2003
  • Master in Theology with a concentration in Pastoral Leadership & Higher Education
• Tennessee Tech University—Graduated December 1991
  • Bachelor of Science in Business Administration with a concentration in Accounting
• Received CPA Designation in 2013 in the Commonwealth of Virginia

Interesting Facts

• Grew up in East Tennessee
• Married to Emilie Carol (from Central Texas) and they have two adult children, Will and Caroline
• Enjoys visiting our National Parks and has hiked in the Great Smoky Mountains (TN/NC), Yosemite (CA), Sequoia (CA), and Haleakala (HI) to name a few
• Served in full-time Christian ministry while pastoring a church for 2 years in Virginia

The post William Drinnon first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

• Senior Auditor
• Assists with audit work and tax return preparation for individuals, trusts, corporations, and partnerships

Experience

• Burkett CPAs – Accounting Intern, January – June 2017
• Pilgrims’ Inn – Bookkeeper, November 2015-June 2017
• Continental Tire – Relocation Payment Processing Intern June-December 2016

Professional and Civic Activities

• Beta Alpha Psi – Secretary
• South Carolina Association of Certified Public Accountants

Education

• Winthrop University – Graduated December 2016
  • Bachelor’s of Science in Business Administration, Emphasis on Accounting

Interesting Facts

• Born and raised in Madison, WI
• Currently resides in Fort Mill, SC

The post Jessica Engel first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

North Carolina: 

• Tax Matrix Changes: Recently, the North Carolina DOR made adjustments to how certain tax definitions are treated in the taxability matrix. These include Streamlined Sales and Use Tax Agreements, among others. Also included are some tax changes that were made effective at the end of May 2015.

South Carolina:

• Veteran Property Tax Exemptions: South Carolina veterans and their spouses should see changes to property tax exemptions this Summer beginning June 1, 2015. The tax exemption previously included two (2) passenger vehicles owned or leased by the veteran, to the spouse of the deceased veteran. Vehicles in question must have been owned or leased by the disabled veteran. The revision now extends the exemption to include one (1) personal passenger vehicle owned or leased by the spouse for the lifetime of the spouse or until the spouse’s remarriage.
• New Tax Portal, MyDORWAY: Corporations and individuals will soon have access to a new taxpayer portal, which should be made available in September 2015. The portal, called MyDORWAY, has benefits consumers wishing for a new way to file taxes. This includes corporations filing income tax returns or use tax, and individual income tax returns. Taxpayers may make payments, file returns, in addition to utilizing available services for withholding and sales tax. Updates are expected to continue for the next three years to increase tax services offered. Those taxpayers using such services as eSales, ePay, or eWithholding (made available by the South Carolina DOR) will be expected to register with MyDORWAY as most of these services will no longer be available once the portal launches.
• Homestead Exemption: South Carolina Governor Nikki Haley recently amended provisions of the Homestead exemption, affecting persons aged 65 or older. The change in value on a primary residence has been elevated to $50,000 from the $10,000.
• Delinquent Taxes: Delinquent taxes may be waived in the cases of certain error by the office authorized to collect the taxes. Other adjustments to delinquent taxes have been made that affect county officials.

Many changes in tax valuations, tax duplicates, property, and settlements affecting county auditors and other county officials have taken place as of June 2015. For more information about these important tax changes, read the full report here [link]. Need help understanding how these changes affect you? Contact Burkett, Burkett & Burkett Certified Public Accountants, P.A. to learn more.

The post Will New Tax Laws Catch You by Surprise in 2015? first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

• Executive Vice President
• Performs financial statement audits for government, not-for-profit entities, and private businesses; HUD audits; and single audits of compliance and internal control in accordance with Governmental Auditing Standards
• Experienced in non-profit taxation

Experience

• Burkett Burkett & Burkett Certified Public Accountants since May 2007

Professional and Civic Activities

• Governmental Finance Officers Association of South Carolina
• South Carolina Association of Certified Public Accountants
  • President for Central Chapter of SCACPA
• American Institute of Certified Public Accountants
• Lion’s Club International—Cayce/West Columbia Chapter
  • Treasurer
• State Street Baptist Church
  • Budget and Finance Committee
• Association of Certified Fraud Examiners

Education

• University of South Carolina—Graduated: May 2008
  • Master of Accountancy
  • Assurance and Business Measurement Concentration
• Clemson University—Graduated: May 2007
  • Major: Accounting
  • Minor: Financial Management
  • GPR: 4.00/4.00
• Awards
  • Clemson University Dean’s List (4.0)
  • Clemson University Presidential Scholarship
  • Member of Clemson Calhoun Honors College

Interesting Facts

• Born and raised in South Carolina
• Resides in Lexington, South Carolina
• Married to the former Natasha Parker
• They have three children

The post Matthew Hodges first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

• Executive Vice President
• Assists individual, corporations, partnerships, not-for-profit, governmental and other industries
• In charge on audits of various organizations, compilations, and reviews

Experience

• Burkett, Burkett and Burkett CPAs, P.A., Rock Hill, SC, May 2000
• Certified Public Accountant in the State of South Carolina in September 2002

Professional and Civic Activities

• American Institute of Certified Public Accountants
• South Carolina Association of Certified Public Accountants
• South Carolina Certified Public Accountants—Catawba Chapter
• Beta Alpha Psi– Alumni
• Victory Sports outreach Volunteer
• Girls on the Run– Tri– County Coach

Education

• Winthrop University, Rock Hill, SC—Graduated : May 2000
  • Master’s in Business Administration
• Winthrop University, Rock Hill, SC—Graduated Summa Cum Laude: May 1998
  • Bachelor of Science in Business Administration with an emphasis in Accounting
  • Member of Beta Gamma Sigma and Phi Kappa Phi honor societies
  • Tillman Award Winner

Interesting Facts

• Native of Fort Mill, South Carolina
• Married to Eddie Smith
• They have two children: Macee and Tre

The post Kimberly Smith first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..