COURTESY / PURDY POWERS & CO.
Richard Emerson, a CPA, is managing partner at Purdy Powers & Co. in Portland.
January 14, 2021
How to manage tax preparation for a year that was anything but business as usual
By Richard Emerson Jr., Purdy Powers & Co.
As we begin working with our clients to prepare their 2020 taxes we have to look back and look ahead to what’s different and what we can do to help them — and you — be prepared.
Last year was hardly business as usual. When it comes to filing tax returns with the IRS the situation remains, well, unusual. We are maneuvering through some uncharted waters. As we begin our work for the tax season one word keeps echoing through the halls at our offices and on our many Zoom meetings and conference calls, and that word is patience.
Have patience not only with your accounting firm but, more importantly, have patience with the process because there are still a good number of kinks to be worked out throughout the filing process. PPP loans and CARES Act grants may add increased complexity to your filing based on how the funds you may have received appear on your balance sheet. Which makes it more important than ever for you to prepare your files as soon as possible so that your tax partners can get to work.
Here are some important tips we are sharing with our clients and want to share with you as well.
- Flexibility is key because many states are still addressing their response to late federal legislation; many won’t conform to federal rules on non-taxable PPP loans.
- Patience is important with CPA firms that are also dealing with COVID compliance and the pressing demands of new legislation that is keeping businesses afloat. And at the same time, tax software packages still need time to catch up with these programs.
- Paperless, paperless, paperless… I can’t emphasize this enough because with the Pandemic still impacting our nation, the IRS has huge backlogs, the Postal Service is behind, and many offices are still closed with work from home being the new business as usual, so the more you can do electronically, the smoother the process.
- When it comes to electronic transmission of files remember this adage “safety first.” It’s mission critical that you make certain your preparer has a secure portal for the transmission of confidential financial information because email is not enough. If the firm you work with doesn’t have a secure online portal (which these days would be very unusual), ask what they are doing to protect your documents.
Now is the time to start pulling your files together for your CPA — the sooner you can get information to your preparer the better.
Remember patience? With seemingly never-ending wait times, the IRS is, for all intents and purposes, not providing taxpayer assistance, and sometimes taxpayer communication and checks can sit with them for weeks if not months before being opened. Things may take much longer than usual so keep calm and carry on; your preparer has your back and will keep you informed as best they can.
Don’t hesitate to ask your accountant for help; it's what we're all here to provide.
Looking into our collective crystal ball we do see more stimulus packages in coming our way and while we look forward to their benefits we also see new complexities as CPAs work to understand how these new stimuli will impact our clients’ taxes. And since the likelihood that these programs will come online during tax season, our team along with colleagues at other accounting firms, will be working long hours to make certain that 2020 filings are buttoned up while also balancing tax planning for 2021.
This of course brings us back to a key word for the coming months: patience.
Most Recent
Most Recent
0 Comments