23 Mar Why This Year’s Tax Filing Experience Will Be Like No Other
Back when we were heading into 2021, there were signs that this year’s tax filing would be a very different experience when compared to previous years. Now, as we continue to emerge from the grip of the COVID-19 pandemic, measures such as the Paycheck Protection Program, Employee Retention Credit, and a host of other stimulus programs and policies have clearly introduced a level of complexity and uncertainty into this year’s tax filing that we haven’t seen in recent memory. However, our award-winning tax team has been staying on top of these changes the entire time, and we are confidently navigating through them for you.
It will take time for the government to sort through the full impact of the stimulus programs, particularly with a new administration in place in Washington, D.C. Plus, the recent passage of the third economic-stimulus package means that individuals and businesses alike are going to have to deal with a good deal of change in the upcoming months.
Additionally, the IRS has had its own set of problems with COVID-19 and staffing. They have many backlogs in their process and it has been impacting the ability to communicate to them and resolve issues as well.
As such, it’s important to remain calm, focused, and patient as you prepare to file your return. Here are three critical factors to be mindful of that can help you stay grounded during the next few weeks:
- Expect an adjustment: Given the lack of clarity typically surrounding these stimulus programs, it’s somewhat possible that elements in your initial filing will have to be corrected once guidelines are handed down by the federal government. That shouldn’t be a cause for alarm, but rather something to be mindful of happening this year. This won’t be the case for many, however, you should be aware that it is likely some taxpayers will require amended returns. Amending your return is a common practice and not an indication of any wrongdoing on your or your tax preparer’s part.
- Consider an extension: There have been some who have called for pushing back this year’s income tax deadlines even further, and it’s still uncertain if that will happen in 2021. The 1040 filing deadline was moved to May 17th recently. However, given that uncertainty, it might be wise to consider an extension. Doing so would give you additional time to evaluate the landscape, but remember it’s only an extension of your time to file. Payments are still due with your extension. We are busy at work filing and tax returns before the deadline, but having us file an extension is always an option for you. If we don’t have your individual tax information to us before May 1, 2021, then we will need to file an extension for your individual tax return this year.
- Understand expectations: You’re not alone in navigating what promises to be one of the most challenging tax deadlines in recent memory. Your tax preparer may not have all the answers at their fingertips either. It is important to have a partner who keeps you informed of any changes in the tax landscape and equips you with practical options that lay out the various pros and cons when needed. They should be analyzing the latest tax changes and benefits when preparing your tax returns.
When you turn to your accountant or tax professional, you’re often looking for things to be either black or white. This year, however, is going to have a lot of gray in it, and that’s why it might be the right time to find a dedicated tax partner. Let our network of CPAs, enrolled agents, and tax professionals at UNBEHAGEN ADVISORS, AN AFFILIATE OF PADGETT BUSINESS SERVICES®, ease your stress and work hand-in-hand with you to navigate what promises to be a complex tax filing experience.