We have finally caught our collective breath following tax season 2021! Between the pandemic affecting the way we work and all the government programs impacting taxes, 2020 was the most unusual reporting year ever. As a result, the months between January and May 2021 were crazier than normal.
We’d like to share a few things we at BJM learned throughout this process:
- The IRS has no problem changing its mind. And that it did — several times for multiple items in Tax Year 2020. Then, in mid-March the agency delayed the deadline for filing and paying 2020 individual returns but not for quarterly estimates or business returns, causing confusion. The IRS has been slower processing paper filings and harder to reach on the phone. Patience and communication were key this season.
- This was the year of the amended/extended return. We had timely clients get delayed, and even a few clients make mistakes. If you fall into either of these categories, don’t sweat it! So far, when we can reach them, the IRS has been pretty flexible.
- Everyone waited a little longer than usual. Between the pandemic and an extra month to file and pay, many clients had a harder time getting organized. Going forward, please remember we need lead time for tax planning and more than a few days to complete a return. That said, we always do our best to satisfy your needs!
- Clients took advantage of CARES Act 401(k) and IRA provisions but forgot to withhold taxes. Many clients jumped at the opportunity to avoid required minimum distributions (RMDs) in 2020, and also took advantage of a provision to withdraw up to $100,000 with no penalty. But not everyone remembered to take taxes from their withdrawal — or their RMD if they changed their mind and took it later. With notice, we could have made estimated tax payments. If the IRS ever offers this again, we’ll remind clients and update projections.
- Secure cloud computing is awesome. The ability to work remotely has enabled our team to continue to be productive, even if they were quarantined due to a sick family member. For your convenience, we encourage clients to send us electronic files, rather than delivering paper documents. However, if you prefer sending us paper documents, we’ll be happy to work with them.
- Teamwork makes the dream work. Thanks to all the changes, updates, postponements, and multiple bits of legislation affecting Tax Year 2020, we had a lot more questions and involvement from clients – and that’s a good thing!. We hope the trend continues.
- No. 1 question: where’s my stimulus check? With three different packages (the CARES Act, second stimulus in December, and American Rescue Plan), our clients had a lot of questions. It was confusing as to who qualified, particularly with children and other dependents. We were able to research, answer questions, and assist.
Tax season 2021 left few dull moments. We cherished working with each of you and are always available to help, whether it’s filing an amended return or tax planning. Give us a call!