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.
It will take time 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.
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 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. 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, and it’s still uncertain if that will happen in 2021. However, given that uncertainty, it might be wise for to consider an extension. Doing so would give you additional time to evaluate the landscape, but remember it’s only an extension on your time to file. Payments are still due with your extension.
- 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 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 Padgett ease your stress and work hand-in-hand with you to navigate what promises to be a complex tax filing experience.