It goes without saying that the amount of new tax rules and programs that are now in force because of the pandemic is astounding. Preparers are stressed as the programs have come out during the active tax season so that extra time to slow down and read and comprehend just is not available, and people are stressed and want answers. What should you do to get help and or make sure you dont miss out on programs that you can qualify for and that can help you recover or survive? For many the answer is to file an extension!
Even though the IRS is allowing until May 17th to file, your preparers need time to read, think, run different options in software, talk to peers and arm themselves with all the additional data in order to determine the best filing strategies for their clients. Pushing now just means that all the available brain power isn’t going to be engaged to help. It’s only four more weeks until the new filing deadline, so don’t rush. File an extension and make an appointment in June to sit down with your preparer and really know more about what to do. For instance, many preparers don’t understand that the cliff number of $150,000 to get the $1400 third stimulus can in some cases be successfully and legally manipulated by filing a married filing separately return for couples making just over $150,000. There are other factors to consider with MFS, such as loss of some deductions, so preparers need time to run the software both ways and do a benefits analysis. Another factor is that the planned stimulus will be determined by tax returns filed on a date in July. So, for a couple that did qualify based on their 2019 return and received stimulus, but in 2020 made more money and would now not qualify, they should extend and file in August, since if they haven’t filed by July, the IRS will go by their 2019 tax data and send stimulus money to them.
We could go on and on, but the bottom line is that if you’re a small business owner, or you are near $150,000 in annual income, you might be better off filing an extension and giving the accounting world a break, as they might be able to give better advice after the May 17th filing date!