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Tax Audits: Tax Preparation Pitfalls to Avoid

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November 20, 2019
avoiding tax audits, best wealth management southlake texas, proactive tax planning, tax audit pitfalls, tax audit triggers, tax planning southlake texas, tax preparation, tax preparation southlake texas, wealth management, wealth management southlake texas

No one wants to be audited, and in fact, less than 1% of all taxpayers are audited. While there is no formula for determining who will or will not be audited, there are certain pitfalls Metroplex Wealth recommends you avoid to minimize the risk:

#1: Failing to Disclose All Income

Since businesses, employers, and financial institutions are all required to report their own income information, it’s very easy for the IRS to cross-reference and flag individuals who fail to report all of their income. Don’t be that guy. Report all of your income and you’re less likely to get audited.

#2: Filing a Return that Differs from Most in Your Tax Bracket

The IRS has a formula they call the Discriminant Information Function that evaluates the normal deductions, credits, and exemptions for taxpayers in various income brackets. If you file a return that deviates heavily from the norm in your tax bracket, this may sound an alarm for the IRS to conduct an audit on your account. Working with a trusted tax preparation specialist in Southlake will help you avoid these costly mistakes.

#3: Reporting Rental Property Losses

In most cases, if you own rental property, you cannot claim deductions on the losses. However, if you’re working more than 50% of your time on rental property investments or actively involved in managing rental properties, then claiming losses on the property is legal. Just be aware it could trigger an audit.

#4: Recent Divorcees’ Tax Returns Don’t Match

Recently divorced? Make sure you and your spouse are aligned on how you are reporting information; otherwise, you could trigger an audit when your reported information does not align.

As the year draws to a close and you begin thinking about filing your 2019 taxes, look to the tax professionals at Metroplex Wealth. We do more than tax preparation; we do proactive tax planning. This means we optimize your portfolio for the lowest taxes possible, allowing you to keep more of your wealth and pass it on to the generations to come. Call us today for a consultation with our team in Southlake, Texas.

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Finance, Wealth Management

Asset Protection in Texas: 4 Ways to Minimize Your Risk

At Metroplex Wealth, one of the services we offer is Asset Protection in Texas. Asset Protection is a commonly misunderstood part of wealth management, so let us clear the air on what it is – and what it isn’t.

What is Asset Protection in Texas?

Asset Protection is simply a legal way to evaluate your assets and ensure that they get to the individuals or charities that you choose. In a society where litigation is more and more common, your personal and business wealth must be structured in a way that it’s protected. Asset Protection is not an illegal way of hiding money. At Metroplex Wealth, we work with an estate planning attorney that works with the law to legally diversify and protect your money.

Ways to Minimize Risk

So exactly how does Metroplex Wealth work to minimize risk? Here are 4 common Asset Protection methods we use often:

Charitable Giving: Gifts to children, charities, or other family members are a great way to minimize risk and increase asset protection. This is one of the easiest strategies and one used often by our clients.
Retirement Plans: Money held in many retirement plans is well protected from creditors until you begin distributions. 401(k) and 403(b) plans are some of the best for Asset Protection, but you’ll find that IRAs also offer some protections as well with generous caps.
Trusts: Worried about creditors coming to your heirs and depleting assets? In that case, a trust may be a smart choice for Asset Protection, as the funds in a trust are protected.
Family Limited Partnerships (FLPs): These partnerships among family are a legal way to provide a safe haven for your assets. You are your family will get limited partnership rights to the money while it’s kept in safekeeping.

Is Asset Protection Planning Right for Me?

If you’re concerned about litigation or your assets falling into the wrong hands in the future, then call us at Metroplex Wealth for a consultation. We have estate planning attorneys on staff to offer sound advice on what makes sense for you and your money.

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