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NATP's 2021 coronavirus relief acts survey resultsBy: National Association of Tax Professionals
August 9, 2021

Tax preparers faced unprecedented challenges in the 2021 tax season, including last-minute tax law changes that needed to be incorporated into returns that may have already been filed and accepted by the IRS. The National Association of Tax Professionals (NATP) sent a survey to more than 20,000 tax preparers, both before and after tax season, comparing their expectations of the upcoming season with how it actually went.

Tax pros weigh in on 2021 tax season, COVID-19 relief acts and future business practices

According to the survey findings, the most critical issues tax pros faced this past tax season were related to tax law changes. But, overall, tax professionals reported they felt confident in their knowledge level when it came to completing accurate returns this season – specifically related to new or revised deductions and credits, and tax law changes or updates.

Additionally, the coronavirus relief acts did not have as negative of an impact on their clients as expected. One complicated issue preparers faced with the coronavirus relief acts was their clients’ recordkeeping and accurate reporting to reconcile the third stimulus payment. The change in business operations due to pandemic safety protocols was also a burden to some firms, according to the survey.

“This data, while not surprising, is important to collect because it helps us develop the resources our members need to provide outstanding service to their clients during tax season and beyond,” said NATP Executive Director Scott Artman. “This tax season was another one for the books, and we’re not expecting the changes to stop as the year progresses. I’m proud that NATP was able to keep tax pros informed and equipped to handle these changes as they were announced.”

Even though tax preparers saw an increase in the number of returns they prepared this season compared to last, the Tax Day extension to May 17 had little impact on the number of returns prepared – both for business and individual clients. The overall impact on tax professional’s business was greater than expected, and reflecting on the past season, more tax professionals indicated they would have increased staffing levels compared to what they expected prior to the tax season. They also think the increased impact will carry into next year’s filing season.

Tax pros reported the biggest ways coronavirus relief acts impacted their business in the 2021 tax season were in stress levels and workload, as well as the complexity of returns, which was expected among industry professionals. At the center of it all, though, was the need for further clarification and guidance from the IRS on issues related to coronavirus relief acts. Many preparers reported getting in contact with the IRS to be a burden on their workload this season.

Other key findings include:
• The majority of firm owners (67%) made no changes to their staffing levels in response to the coronavirus relief acts, but in hindsight, many tax professionals would have hired more staff if they had known the complexities associated with this tax season
• Tax professionals, in general, filed about the same number of extensions as last year
o About a quarter of the extensions filed were due to effects from the coronavirus relief acts
• Tax professionals mostly conducted client interviews virtually or over the phone
• 25% of firm owners plan to increase their staff for next year, up from 9% when asked prior to tax season

To view the full report, or to speak with someone on its findings, please contact Nancy Kasten, NATP marketing director, at nkasten@natptax.com.

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Tax Season Updates events begin in person on Oct. 25By: National Association of Tax Professionals
July 29, 2021

We don’t have to tell you that the latest tax season was, shall we say, tumultuous. Between last-minute tax law change and COVID-19 safety practices, it’s been a lot. We know you’re short on time and patience, which is why we created an event to get you the updates you need to do your job and apply updated federal tax code to your clients’ unique situations.

There are Tax Season Updates in 100+ cities throughout the U.S., which means you’ll easily be able to find an event close to you. If you’d prefer, we’re also offering this event virtually, if that’s your preferred learning style. (Premium members can attend the virtual event for free!)

These events, formerly known as our 1040 Updates, are designed to help you understand the complexities of tax law to help you serve your clients with the excellence they deserve. Taught by a team of instructors using hands-on learning tools, this two-day workshop provides detailed, in-depth information on the most recent legislation and IRS updates. You’ll earn 16 CPE by the end.

Each event will include information and analyze provisions of the Consolidated Appropriations Act, 2021, and the American Rescue Plan Act, and how these provisions affect your clients. We’ll also teach you to determine the tax treatment of different sources of income, apply inflation-adjusted amounts to 2021 individual returns, and analyze the change in tax rules for certain credits and deductions, including the expanded child tax credit and the third economic impact payment, including plus-up payments.

Plus, you’ll get an on-demand webinar in January covering any last-minute tax law changes, a quick reference desk card, a multi-page tax law quick reference guide with flowcharts, an e-book with handouts from each session and a certificate of completion to proudly display to set yourself apart from your competition.

The first live in-person events begin Oct. 25, 2021, in Lakewood, Colorado; Bay City, Michigan; Memphis, Tennessee; Perrysburg, Ohio; Liverpool, New York; and Bismark, North Dakota; so be sure to register soon!

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You make the callBy: NATP Research
June 24, 2021

Question: Mariana and Luis regularly contribute $600 cash annually to their favorite charity and ask you if they may take the above-the-line deduction for the $600 on their 2020 tax return for which they file MFJ. What do you tell them?

Answer: No, they may not claim all $600. For 2020, Mariana and Luis are allowed to deduct up to $300 of cash qualified charitable contributions as a deduction before AGI if they claimed the standard deduction [§62(a)(22)]. For 2020, whether filing as single or MFJ, the amount is still only $300, not $600. For 2021, a similar provision would allow a deduction of up to $600 for MFJ filers as a deduction from AGI [§§ 170(p) and 63(b)(4)]. To verify their favorite charity is a qualified organization to receive deductible contributions, use the IRS Tax Exempt Organization Search tool. The Coronavirus Aid, Relief, and Economic Security Act changed the law for 2020 charitable contributions, and for 2021 the Consolidated Appropriations Act, 2021 changed the law.

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Free post-tax season webinars for all tax pros By: National Association of Tax Professionals
June 14, 2021

Taxpayers, and by association their tax professionals, may face two major issues this post-tax season: IRS refund adjustments and estimated tax payments for the 2022 tax season.

The IRS is currently recalculating taxes on unemployment benefits for 2020 based on recent tax law passed during the 2021 tax season. The IRS began issuing refunds the week of May 14 to eligible taxpayers who paid taxes on 2020 unemployment compensation that was later excluded from taxable income due to the American Rescue Plan. Tax pros should confirm these recalculations were done correctly for their clients. In some instances, if a client did not originally claim the earned income credit or other credits, but is now eligible, an amended return will need to be filed.

The IRS will send taxpayers a notice explaining the corrections, which they should expect within 30 days of when the correction is made. Taxpayers should keep any notices they receive for their records. Taxpayers should review their return after receiving their IRS notice(s).

Corrections to any earned income credit (EIC) without qualifying children and the recovery rebate credit are being made automatically as part of this process. However, some taxpayers may be eligible for certain income-based tax credits not claimed on their original return, such as the EIC for their qualifying children. If so, they should file an amended tax return if the revised adjusted gross income amount makes them eligible for additional benefits.

Additionally, making estimated tax payments throughout the year prior to filing their return can help taxpayers reduce that end-of-season sticker shock some face when they realize they owe a significant amount of money (and avoid penalties and interest). Many taxpayers may be required to make estimated tax payments if their income is drastically different from prior years.

To help tax professionals with this post-tax season information, the National Association of Tax Professionals (NATP) is offering two completely free webinars that will detail these topics and help tax professionals determine what they can and should be doing now to help their clients.

Filing Form 1040-X After IRS Calculations — As the IRS recalculates taxes on unemployment benefits, it’s important for you to confirm that it was done correctly. For example, if your client did not originally claim the earned income credit or other credits, but is now eligible, you’ll need to file an amended return.

Calculating Estimated Tax Payments — With the economy opening back up, your client’s income may look drastically different from last year. There are tools available to you to help calculate estimated tax payments and minimize penalty abatement for your clients. We also discuss the new proposed legislation, Tax Deadline Simplification Act.

To learn more and register, visit natptax.com/help.

These webinars are available to anyone interested, not just NATP members.

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You make the callBy: NATP Research
June 3, 2021

Question: Cesar is a plumber, with a Schedule C business. On May 6, 2020, his son, Cesar Jr., who is 10 years old was diagnosed with coronavirus by a test approved by the Centers for Disease Control and Prevention. Cesar was told by his doctor to quarantine since he was exposed and to care for his child until further notice. Cesar was unable to work for 60 days since he was taking care of his child. Cesar’s tax preparer is reading about Form 7202 and is wondering, does Cesar qualify for the sick leave credit for certain self-employed individuals?

Answer: Yes. Cesar can claim the refundable credit for the applicable days on his 2020 tax return. He can do so by filing Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, which is attached to his Form 1040.

The credit is limited to the lesser of 100% of average daily self-employment income or $511 per day ($5,110 in total) if the self-employed individual is:

  1. Subject to a federal, state, or local quarantine or isolation order related to COVID-19
  2. Advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
  3. Experiencing symptoms of COVID-19 and seeking a medical diagnosis

The qualified sick leave equivalent amount is limited to 67% of average daily self-employment income or $200 per day ($2,000 in total) if the self-employed individual is:

  1. Caring for an individual who is subject to a federal, state, or local quarantine or isolation order related to COVID-19, or who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19
  2. Caring for a child whose school or place of care is closed, or childcare provider is unavailable due to COVID-19 precautions; or
  3. Experiencing a substantially similar condition specified by the government
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