Weeks after a series of federal stimulus payments to individuals rolled out, the U.S. tax season is ramping up to meet the growing demand during its busiest time, forcing filers and the experts who help them to scramble as they try to make sense of the economic chaos of 2020.
The COVID-19 pandemic began spreading quickly last spring, forcing businesses across the country to shut down, layoff workers, and rethink how they operate. The virus continues to affect the country, creating new challenges for U.S. taxpayers this season, including individuals and business owners. The virus at its worst brought the U.S. economy to a standstill in 2020, triggering several government payments to many people in the country.
All of this means the tax filing season in 2021 will be anything but normal for many U.S. filers, including businesses that have received help from the U.S. Small Business Administration to mitigate losses brought on by closures. Accountants are working to help business owners comply with the rules related to those special Payroll Protection Program loans offered by the federal government, which includes understanding the separate rules that applied to each of the different loan programs approved by the U.S. Congress as part of multiple stimulus initiatives, according to an Austin CPA .
Business owners will face a number of complex questions this tax season as they determine how to report those new government business loans aimed at keeping workers on payrolls. The loans, part of the first stimulus program approved by Congress last year, were designed to help businesses and workers as the country was forced to shut down nearly all the economy last year to stifle the virus’s spread.
The new year started with a second round of stimulus payments distributed to many Americans and continued in March with a new round of checks promoted by President Joe Biden. Even as the 2021 tax season was gearing up, the Internal Revenue Service began depositing the new stimulus payments into taxpayer accounts days after Biden signed the program into law. For those taxpayers who may not have received the individual payments, their 2020 tax return is an opportunity to determine if you qualify. Any missed payments can be claimed during the tax season, so it pays to make sure you’ve taken every step possible to determine your eligibility.
The most recent stimulus program Biden signed into law also impacts the tax filings for 2020 by some Americans. The pandemic forced more than 20 million people to seek unemployment assistance, and a new provision exempts taxpayers who made less than $150,000 from paying taxes on the first $10,200 of their unemployment benefits during 2020. The provision surprised millions of taxpayers who filed their 2020 returns before the law was passed in March, meaning those who qualify will have to amend their returns to receive the new tax benefit.
After all the problems brought on by COVID-19 last year, it pays to be a little more careful this year when filing income taxes because of the special provisions that could have a big impact. Make sure to obtain all the benefits you deserve to help ensure that 2020 doesn’t continue to take its toll on your pocketbook.
