There’s no mistaking that tax time can be confusing.
There are enough deadlines and deductions to make your head spin, and this year adds a new level of complexity to the mix. Thanks to the various COVID-19 economic programs and tax tweaks, this might be the year you reconsider filing on your own and turn to a tax professional to help with your 2020 return.
While it may be faster and cheaper to file your own tax return, you could be missing out on valuable deductions and credits that lower your taxable income or generate a larger refund for you, your business and your family.
Here are just a handful of the various things to consider this year:
- The pandemic has forced many people to dip into their retirement savings to make ends meet. Recent changes now enable some to waive the early withdrawal penalty on their retirement distributions and spread the ensuing tax across the next three years.
- If you didn’t receive the first or second round of stimulus payments issued by the federal government last year, you might be eligible to receive a refundable credit on your 2020 tax return.
- Another important change for families is the ability to use your 2019 income to calculate your 2020 child tax credit and earned income credit if your income significantly decreased in 2020.
- If your business received a Paycheck Protection Program (PPP) loan, the loan may be eligible for forgiveness with very little paperwork thanks to the recent stimulus bill. And if your loan was forgiven in 2020, not only will it be nontaxable income on your return, but expenses paid with the forgiven loan are now deductible.
- Businesses that received PPP loans are now entitled to certain payroll tax credits to lower their tax liability or garner a refund. This is a win-win for small business owners fighting economic uncertainty from the pandemic.
This is just a sampling of the things to keep in mind as you start the process of filing your taxes, and that’s why having a trusted tax partner can make this year’s filing just a bit easier. Let our network of CPAs, Enrolled Agents and tax professionals at Padgett put their collective expertise to work, helping you and your business identify tax savings, while giving you needed peace of mind.