We asked our tax professionals to explain what worked and what didn’t work this past tax season. They offered the following insights into planning for the next tax year while allowing space and time for the unexpected.
The Internal Revenue Service (IRS) is working hard to keep up. For example, as of late December 2021, IRS had about 10.5 million returns to process from 2021 requiring manual review and an additional 30 million returns requiring manual review this year. If the telephone demand the IRS received this tax season (200 million calls) vs. 2019 (39 million calls) was any indication, it’s no wonder they are burning the midnight oil.
We are still sifting through the massive tax shifts of the past two years. Taxpayers and preparers hoped for a return to normalcy as they filed taxes in 2022. Instead, they got a continuation of pandemic relief programs with significant tax implications without the extended deadlines of the prior two years. The continuation of pandemic programs combined with numerous fast-paced legislative and executive actions presented challenges your tax professionals worked hard to understand and overcome.
Planning has never been more critical. As changing laws, modified tax credits, and unemployment taxes continue to be at the forefront of every accountant’s mind, it’s also a good idea for you to develop a plan to stay organized and get ahead. Proactive planning keeps the stress at bay and will result in tax preparation that is faster and efficient for you. What is an excellent strategy? File early, so you don’t get caught by surprise next year. Tax Season 2023 is just around the corner.
Education is key. It’s a complex time in the tax world. To stay ahead of the new, more complicated tax law changes that affect your individual and business finances, be sure to read our articles and guides to stay up-to-date. Also, schedule a meeting with us to discuss your needs, so you’ll know what changes affect your specific situation.
The one thing we can count on is change. The IRS has labeled the past two years as “unpredictable years with many changes and challenges.” That’s an understatement in the tax world and in our personal lives as we all had to find ways to operate amid the pandemic. And we continue to successfully adapt to these changes with the many innovations that allow us to work smarter.
Set an appointment with your tax pro. If you find yourself dashing to your tax professional’s office every year close to Tax Day while promising to do better next time, take the opportunity to make a change now. Many tax professionals work year-round and may have more time to meet with you for a mid-year check-up before extension season begins. Give yourself—and your tax professional—a break by getting something on the books now.
In closing, despite what seemed like chaos over the last two years, give yourself some credit for the ability to adapt and operate within much uncertainty – here’s to hoping the next tax year involves some smooth sailing.