Five take aways from the longest tax season

2020 was a long year for everyone, and the 2020 tax season is no different. The federal government extended the date for filing taxes by over a month — from April 15 to May 17 of 2021 (And June 15th for TX residents), and ended a long, difficult tax season for many. Here are five things that we took away from the experience.

You can count on things to change

This isn't just our assessment — the IRS itself called the last year "an unpredictable year with many changes and challenges." Due to the last-minute push for another round of stimulus checks in December of 2020, as well as a series of other changes and challenges, tax filing season, which typically begins in the middle of January, didn't open until a month later. IRS Commissioner Charles Rettig anticipated a fairly typical tax season, despite the changes, and initially set the date for filing to be due as usual on April 15.

However, in March, the official deadline was postponed to May 17, which made many tax professionals feel like it was 2020 all over again.  Then after the State of Texas experienced an unprecedented freeze and power outage debacle, it was declared a Federal Disaster area and given an additional extension to June 15. Thus, the importance of staying up to date in a changing tax landscape was even more essential.

Taxes are complicated

The December stimulus push left a lot of taxpayers, especially those with children, or those receiving unemployment benefits, with a lot of confusion. In fact, many people who had in the past filed their own taxes, or used DIY tax preparation software, instead opted to employ a tax preparation specialist, with an increase of 10.6% over last year for e-filed returns, compared to a 5.6% decrease in self-prepared returns.

It's not too late to hire a tax professional if you don't employ one to file your 2020 taxes. With more stimulus changes on the horizon, you may be glad next spring that you started looking for someone capable now.

Everyone makes mistakes

And this is why the IRS allows for individuals to amend their tax returns. In fact, your newly retained tax professional may be able to complete one for you. Additional COVID-19 financial relief is based on 2020 tax filings, so having a professional review your return may impact the amount f money you'll receive.

Or, taxpayers who missed the tax deadline may need professional service. The IRS isn't going anywhere, but a professional can help work with the IRS to abate penalties for late filings if there are extenuating circumstances. Plus, if you haven't made late filing mistakes in the past, you may be eligible for administrative relief under the IRS's First Time Penalty Abatement policy.

Be patient

You may be checking your bank account daily for your 2020 tax refund, and if you're like many people, this money may be needed to cover gaps that unemployment checks don't. But, the IRS can only move so fast, and with individual filings more complicated this year than in many others, the IRS is moving slower than usual. The IRS has been slow to release information about stimulus-related matters, and in addition to this, many taxpayers are still waiting for their Economic Impact Payments (EIPS, or stimulus checks). Beyond this, the IRS is holding over 30 million returns for manual processing, both paper returns and those that were e-filed. This means longer delays for tax returns.

Calling the IRS to check the status of your tax return isn't likely to yield results. Fewer than 10% of phone calls to the IRS's 1040 lines actually reach a real person. Even if you are able to get hold of someone, they may not be able to explain the processing and refund delays. The only thing you can do at this point is to wait and be patient.

We're still in this together

Tax professionals are likely just as frustrated and exhausted as taxpayers, with the changes and delays of the 2020 tax season. On May 18, Isai B. Cortez, a tax lawyer from California, posted a direct message to many tax professionals in the Twitter community, featuring a Starbucks gift card and the message, "Coffee on me today."

In response to questions about this generous message, Cortez responded, "Our #taxtwitter community has been through a rough season. Helping our clients, dealing with ever-changing rules to our country's tax system, and just the stress of doing this during a world crisis. It was the least I could do to say job well done to a community that has in turn been supportive to me."

If you're frustrated, either as a taxpayer or a tax professional, you aren't alone. As a nation, we've weathered the worst of the COVID-19 pandemic and the economic uncertainty together, and our determination, patience and sense of community will help us weather the longest tax season, too.

Do you have more questions?

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