Perhaps you’ve noticed that accounting stories don’t typically dominate the evening news headlines. This week however, accounting news is trending! 2021 is off to a busy start and January also marks the beginning of the dreaded or perhaps welcomed (if you are hoping for a tax return) tax season! In addition to the tax season starting, there is also major news on the Paycheck Protection Program (PPP).
Now that 2020 has ended, you may want to start preparing to file your taxes. It is never too early to start gathering your paperwork and to schedule a meeting with your CPA or accountant. However, in today’s accounting news, it is important to note some helpful tips and updates regarding the upcoming tax season.
- Tax Filing Dates:
- As a taxpayer, it is important to know that the date the IRS will begin accepting tax returns is February 12, 2021. This date is slightly delayed compared to previous years where returns were accepted as early as January. This delay is to allow the IRS time to prepare their systems and programs after the second round of stimulus package payments were issued to millions of Americans. The IRS has more pressure now than ever before to get tax returns out timely and efficiently.
- Some tax return softwares or websites are allowing you to complete your tax returns with them currently. These websites however won’t file the return with the IRS until February 12.
- The deadline to file your taxes currently remains April 15, 2021. Due to the COVID-19 pandemic, it is unknown if the IRS will extend this deadline.
- If you request an extension on filing your 2020 taxes, the deadline is October 15, 2021.
- Tax Tips for a Smooth Tax Season:
- If you plan on using a certified public accountant or accounting firm to assist with your tax preparation or filing, it is recommended to schedule your consultation as soon as possible. With tax season here, an accountant’s schedule tends to book up faster than other times of the year. Allow yourself plenty of time to meet with your accountant prior the April 15, 2021 deadline.
- For the fastest turnaround time regarding your potential refund, it is recommended that you file your taxes electronically and choose the direct deposit or ACH option rather than opting for a paper check in the mail.
- The IRS recommends you review the Rebate Recovery Credit rules and guidelines. This is for anyone who thinks they may not have received their full or partial stimulus payments.
- Before filing your taxes, ensure you have received all of the required documentation from your employer, banking institutions, investment accounts, mortgage holders, etc. By waiting until all of the required documents have been received, you can avoid having to make an amendment to your taxes.
Paycheck Protection Program
The Paycheck Protection Program was created as a result of the COVID-19 pandemic. This is a small business administration loan to essentially help employers keep their employees employed. A second round for PPP loans began being offered on January 13, 2021. The PPP loan has been highlighted in the accounting news this past week due the second draw being offered in addition to updated forgiveness guidelines. Now is the time for accountants and CPAs to step up and assist their small business clients by providing guidance and insight.
- Qualifying: Now is a good time reach out to your CPA or accountant to see if you may qualify for the second round of the SBA loan. Requirements for the second draw have changed from the first. Your CPA or accountant will be able to determine if you qualify and if you should apply.
- Software: CPAs have online tools and software to assist clients with their PPP loans during the application and funding process. Because of the rules and regulations surrounding the program, it is also useful to check in with your CPA if you have questions or concerns. CPAs will have the knowledge and resources you seek.
- Understanding the Payroll Protection Program and your Taxes: If you received a PPP loan, before filing your taxes, here are a few important pieces of information to consider:
- If your loan has been forgiven partially or fully, you do not need to include the forgiven portion of the loan on your taxes as income.
- You may qualify for FFCRA (Families First Coronavirus Response Act) credits on your taxes. FFCRA was an act that provides leave options for employees due to the pandemic. These credits are in addition to taking advantage of the PPP loan. Consult your accountant to see if this applies to you.
- Payroll taxes from March 27 through the end of 2020 have the option to be postponed.
- Review expenses your loan helped to cover the cost of. Certain expenses paid with PPP funds can be deducted on your tax return.
The Payroll Protection Program is a totally new realm for small businesses and tax payers. It is important to consult your CPA with tax related questions as we begin the tax season. For other great resources regarding your PPP loan and tax questions, you can visit the Department of Treasury or IRS websites.
Staying up to date on news in accounting—especially as one year ends and another begins—is crucial! This week’s big stories regarding accounting focus on the upcoming tax season and the Payroll Protection Program. Tax season is upon us and after an unpredictable year due to the pandemic, we are facing new accounting factors such as relief programs and aids like never before. Remember to check in with your accountant or CPA to set 2021 up for financial success!