While Texas has no state income tax, federal taxes can often be reduced through retirement contributions, charitable deductions, strategic timing of income or large purchases, and business tax planning strategies. The best approach depends on your income sources and long-term goals.

The IRS may assess late filing penalties, late payment penalties, and interest. If you cannot pay in full, you may qualify for a payment plan. Texas generally does not impose individual income tax penalties, but business taxes (such as franchise tax or sales tax) can carry their own penalties and interest.

Yes. Many Texans mistakenly believe that because there is no state income tax, no tax return is required. Federal tax filing requirements still apply, regardless of where you live.

Yes, Social Security benefits may be taxable depending on your total income. There is a $6,000 exemption per person, including individuals over age 65, which begins to phase out at income levels of $150,000 per person.

Yes. Oil and gas income can qualify for deductions such as certain drilling costs incurred before production and, in many cases, a 15% deduction of gross income from the property.

Real estate income is typically treated as a passive activity, meaning losses generally offset only other passive income, with unused losses carried forward. There are also newer favorable rules related to certain buildings placed in service in 2025 and later.

Yes, if you earn income sourced to another state. This can occur through business activities, investments, or work performed in another state. Each state has its own rules for determining whether sufficient connection (nexus) exists.

There has been discussion around making portions of overtime or tip income nontaxable; however, most of our clients do not benefit from this. It is more commonly relevant to younger earners or lower-income individuals rather than established professionals or business owners.

Income tax is based on profit earned.

Texas franchise tax is a business privilege tax imposed on certain entities for operating in Texas and is calculated using revenue-based formulas, not personal income.

No. You already received the deduction when you originally contributed funds to the charitable fund. Distributions made by the fund in later years do not create additional deductions for you.

Texas most commonly audits sales and use tax, franchise tax, and employer-related taxes. These audits typically focus on compliance and documentation.

Commonly requested documents include bank statements, sales records, exemption certificates, invoices, contracts, and accounting records. The exact documents depend on the tax type being audited.

An audit provides the highest level of assurance and includes extensive testing.

A review offers limited assurance through inquiry and analysis.

A compilation involves organizing financial information without providing assurance.

Auditors are allowed to review records directly related to the tax or period under examination. Requests must be reasonable and relevant to the audit scope.

Typically, Texas audits cover four years, but this period can be extended if records are missing or fraud is suspected.

Missing or invalid exemption certificates often result in the tax being assessed against the seller, along with penalties and interest.

Common issues include missing exemption certificates, misclassified transactions, underreported taxable sales, and poor recordkeeping.

A bookkeeper records transactions, reconciles accounts, categorizes income and expenses, and ensures financial records are accurate and up to date.

Bookkeeping should be done monthly at a minimum. High-volume businesses may require weekly or even daily updates.

Typically, bank statements, credit card statements, receipts, invoices, payroll reports, accounts receivables data, and loan statements.

QuickBooks is commonly used, but the best software depends on your business size, complexity, and reporting needs. We are happy to assist with determining the best software for your business.

Yes. We can reconstruct, clean up, and bring books current, even if they are months or years behind.

Yes. Software records data, but a bookkeeper ensures transactions are classified correctly, reconciled properly, and reported accurately.

You will typically receive a profit and loss statement, balance sheet, and cash flow insights, along with customized reports as needed.

If you are experiencing cash flow issues, stalled growth, inefficiencies, or major transitions, a consultant can help identify problems and implement solutions.

We work with a variety of industries. Please see our Services page for a full list of the industries we serve.

We assist with financial strategy, operations, tax planning, growth planning, compliance, and process improvement.

Our process begins with assessment and discovery, followed by strategy development, implementation, and ongoing support.

Yes. Sproles can help analyze cash flow, identify cost-saving opportunities, restructure operations, and develop a recovery plan.

Yes. We assist with forming Sole Proprietorships, Non-Profits, LLCs, S Corporations, and C Corporations, including guidance on tax implications.

Yes. We take confidentiality seriously and are happy to sign non-disclosure agreements when requested.