The October 15 deadline for filing extended 2020 returns is just around the corner. Whew! Reflecting back over the past five months since the delayed May 17th Tax Day, 2021 tax season has continued to be the most unusual one yet.
Here’s an updated list of some of the things our clients and team experienced and learned throughout tax season 2021:
- Tax Year 2020 was complicated. As a result, more taxpayers than ever turned to accountants for prepared returns. By some estimates, 10% more 2020 tax returns were prepared by tax professionals vs. previous years.
- We have all become Zoom experts! Even a few team members and clients who were slower to accept new technology embraced video conversations. Turns out all those Zoom family gatherings and other meetings made video conferencing with their tax accountant a natural transition.
- Secure cloud computing is awesome. Here’s another technology update. The ability to work remotely has allowed our team to remain productive throughout the pandemic. More clients than ever used our secure portals to safely share documents. If you still prefer paper, that’s fine as well!
- Some clients are still searching for documents. On October 1, two weeks from the final filing deadline, we are still waiting on paperwork. Between the pandemic’s resurgence and filing extensions, many clients have found it harder to get organized. We will always do our best to help, but it takes more than a few days to complete a tax return.
- Stimulus payments require reconciliation. Whether you received a check, direct deposit, or debit card, these economic income payments (EIPs) are actually an advance credit against your 2020 taxes – not income. If you didn’t receive EIP funds, but still qualified, we can include the credit on your return. Save some hassle (and money) by double-checking, as the payments are sometimes overlooked. The IRS will catch any mistakes, send a notice, and we’ll have to fix your return.
- The IRS kept changing its mind. The agency did so for multiple items in 2020, including the last-minute delay of Tax Day for individuals. The delay was not granted for quarterly estimates or business returns, causing extra confusion. The IRS has also been slower processing paper returns, and customer service has been very difficult to reach.
- Clients took advantage of CARES Act 401(k) and IRA provisions but forgot to withhold taxes. The opportunities to avoid minimum required distributions (RMDs) and withdraw $100,000 without penalty were popular. But not everyone remembered to withhold taxes from their withdrawal – or their RMD if they ultimately took it. With notice, we could have made estimated payments. If the IRS repeats this, we’ll remind clients!
- Teamwork makes the dream work. We had a lot more client questions and closer involvement this year, due to all the IRS changes and legislation affecting Tax Year 2020. We loved it! We hope the trend continues.
- 2020 was the year of the amended/extended return. Normally prompt clients were delayed, and a few clients made mistakes that required amendments. If this happened to you, don’t worry! The IRS has been pretty flexible.
Despite the chaos of tax season 2021, we cherished every moment working with you. Whether you need tax planning advice or help with an amended return, we are always here to help. Give us a call!