The 2021 tax season was not only busy, it was also made more complex by the pandemic and the changing laws. Accountants and their clients can't be sure if this upcoming busy season will be as convoluted as the last, but there are steps you can take now to make tax planning and preparation simpler.
The way tax seasons work, it always feels like the next one is just around the corner.
Over the last year (2021), there have been several unclear situations regarding how taxes are filed and to whom they pertain. Granted, 2021 was a unique year all around. The world has faced a lot of changes in a short time, and it has carried over to the field of accounting.
Now, accountants and their clients have to be uniquely aware of new regulations and classifications instituted for the unique circumstances of 2020-2021. Accountants have been battling several issues, ranging from guidance on COVID relief to answers from the IRS regarding backlogs. CNBC mentions that over eight million paper-based tax returns ended up in a backlog thanks to the pandemic's effect on the IRS's offices. This year might be just as bad. Still, accountants and their clients can buffer themselves against the fallout by focusing on preparation.
Get Documents in Order
Most accountants know that filing limits have been extended because the pandemic is still not ultimately over with yet. The extension was designed to give accounting firms and CPAs the time to train themselves and their staff on new accounting software. The hope is that this extended window will allow for better results regarding accuracy in submitted returns.
Accountants need to be aware of these windows and set guidelines for clients that give them enough time to check values and prepare returns. Timely filing should be a hallmark of an accounting business, especially if they wish to avoid having their clients pay penalties for late filing. Many accounting firms have taken electronic processing a step further, allowing an online platform for clients to submit their documents. This approach has the added benefit of saving this data on a server for easy access later (in the case of an audit, for example).
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