With the new year comes the beginning of a new filing season for individual tax returns. For many this can be a daunting task, but P&N tax advisors are experienced and ready to assist. We’ve outlined five key points below to help you prepare and contribute to a smooth 2021 filing season for both you and your CPA.
Good record keeping is essential during filing season. Tax forms can begin arriving by mail or electronic delivery as early as January, so separate out anything tax-related and keep these documents in a secure location. Best practice is to keep all physical documents together in one folder and to store all electronic copies in one location on your computer. When gathering your tax documents, it may be helpful to refer to your 2020 tax organizer to identify documents you should expect to receive.
For 2020 in particular, you may want to be on the lookout for any 1099-Gs reporting unemployment payments or 1099-NECs reporting non-employee compensation if these apply to you. Form 1099-NEC is a new form for 2020 and will report any non-employee compensation proceeds previously reported in Box 7 of the 1099-MISC. For more information, please refer to our “New for Tax Year 2020: Form 1099-NEC” article.
Once you have the majority of your information, contact your P&N advisor to begin the preparation process. Submitting your information as soon as possible allows ample time for your CPA to review your information and address any questions that arise during preparation.
Did you move during 2020? Did you get a new email address or phone number? If so, you may need to notify your CPA of any changes to your contact information if you have not done so already. It may also be wise to go ahead and notify your CPA of your preferred delivery method for your tax return when it becomes available. If you have a question about the delivery methods available to you, contact your P&N advisor to discuss your options.
If you experienced any major changes during the year that may affect your taxes, it is best to notify your CPA now rather than later to avoid any unexpected tax consequences or delays in the preparation of your return. Notable items include investing in a new business, selling securities for large gains, the birth of a child, or moving to a new state. If you are unsure whether your particular situation may affect your taxes or not, contact your P&N advisor for guidance.
If you are unsure what credits may be available to you, reach out to your CPA for assistance in determining your eligibility. For 2020 in particular, you may be eligible for the Recovery Rebate Credit that was authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This credit is eligible to taxpayers who did not receive the full amount of the recovery rebate (commonly known as “stimulus checks”) as an advance payment during the year.
Don’t forget these important deadlines for the 2020 filing season to avoid any unnecessary penalties:
March 15, 2021
Partnerships and S-Corporations
April 15, 2021
Individuals and C-Corporations
May 15, 2021
Louisiana Tax Returns
Now that you know what you need to get started, contact your P&N tax advisor today to make a plan for this filing season. It’s time to get your 2020 filings underway!