By Karen Carr Keefe
Erie County Editor
Tax time can be the best of times or the worst of times.
By now, most of us have received all the forms, documents and receipts needed to file our 2020 income tax returns. What’s the best next step?
Organized, efficient individuals and business owners have already set up their appointment with a tax preparer.
Many others confidently plan to go the DIY route with on online program such TurboTax.
Some may just take pen in hand, fill out the form, enclose a check if needed, lick a stamp, and call it a day.
Still others are prone to procrastinate and ponder problems that plague us and keep us awake at night. Right?
Where’s the folder with last year’s return? Where did I put those envelopes with W-2s and 1099s in them? Did I even open the envelopes? Are the forms still valid if they have coffee stains on them?
If tax time is a terrible time for you, there’s a business on Grand Island that may be just the ticket to get through the season successfully. There may even be a refund in your future.
Christine A Learman, CPA, PC is a full-service financial company that celebrated its 30th anniversary last January. The firm provides the following services:
•Tax management and preparation services
•Estate and trust planning and tax preparation
•Internal Revenue Service and State representation
•Financial statement preparation
•Financial and retirement planning.
Learman, a lifelong resident of Western New York, has been president of Christine A. Learman, CPA, PC, since the company’s founding in 1990.
She graduated magna cum laude with a bachelor’s in business administration from St. Bonaventure University and graduated from the Tax Certificate Graduate Program at the University at Buffalo. Her areas of expertise are corporate taxation and planning, individual taxation and planning, closely held companies and family businesses, and personal financial planning.
Her professional staff includes Jacalyn Gaston and Rory S. Phillips.
Gaston received her bachelor of science degree in 2008 from Canisius College, with a dual major in accounting and accounting information systems. She has been with the firm since 2014. Phillips has been with the company since 2017.
We asked Learman for some tax tips or suggestions that we hope will help you navigate through the season with minimal worries:
Question: Under what circumstances is it best to go to a tax preparer, rather than do it yourself or rely on a family member or friend to do it for you?
Answer: Unfortunately, the complexity of the Tax Code has made it very difficult for an individual to prepare their own tax return unless they are well-versed with the current tax laws. In addition, there have been many changes in the past year that will have a significant impact on filing 2020 tax returns.
Q: What are some key changes that taxpayers should be preparing for or be knowledgeable about?
A: Key changes that may affect individual tax returns relate to the Economic Impact Payments received during 2020 and 2021 and calculating recovery rebate credits, reporting unemployment benefits received during 2020, changes with dependents and filing status, elections that may be used to calculate earned income and child care credits, changes in qualified expenses for educator expenses and special rules that may apply to IRA and retirement plan distributions.
Q: What advice do you have for the taxpayer – tips or things they should be aware of as they get their forms, paperwork and receipts ready for their appointment with a preparer?
A: Start gathering your 2020 documents now. There may be a benefit to filing early this year if another round of Economic Impact Payments is approved, as the amount received will be based upon the most recent data the IRS has available. If your 2020 income was less than 2019, your 2021 payment may be larger if you’ve filed your 2020 tax return and the IRS has your 2020 data on file.
Q: What should people bring to their appointments? (For personal or for business tax returns)
A: For individual tax returns, compare the documents you received for 2020 to the documents that were used to prepare your 2019 tax return. Make sure you have the same type of documents, and if you don’t, have an explanation for the tax preparer such as “the account was closed,” and “change in employers” or the form hasn’t been received to date, etc. If you are meeting with a tax preparer for the first time, they will let you know what will be required by their specific firm. Personal identification such as driver’s licenses, Social Security cards and prior year’s tax returns will be required by all tax preparers. The preparation of business tax returns is more involved and will require additional information depending on the business activity.
Q: Do you have many customers who come in with unopened envelopes with their W-2s enclosed or who may not have all the items they need? Or are most informed and ready?
A: Yes, occasionally customers do come in with their information in unopened envelopes and missing information. We highly recommend that they open the envelopes to determine they are dropping off the proper information and that the information is complete. Otherwise, it may cost additional time and increase preparation fees. We utilize checklists and questionnaires that assist clients when they are compiling their information. So the majority of our clients are informed about their documents and provide information that is complete.
Q: Do you have a lot of return customers?
A: Yes, we are very fortunate to have a great client base of individuals and businesses. We have been in business for over 30 years and have several families and businesses that we have worked with for that length of time.
Q: Are there some types of needed forms that may not have been sent out yet by financial institutions?
A: Generally you should receive your W-2’s and 1099s by the middle of February. However, there are several forms from financial institutions and businesses that may not be received until March or later.
Q: You have said that the tax season has been more like an all-year heavy schedule of appointments and work for you. What are some of the factors that have made this a year-round business, instead of being seasonal, from Jan. 30 or so leading up to April 15?
A: The pandemic has affected everyone on multiple levels. From our prospective, several factors contributed to a never-ending tax season. The 2019 tax filing season was extended last year from April 15 to July 15 and beyond until Oct. 15 for some filers. We work with many businesses throughout Western New York who were significantly impacted by shutdowns and work restrictions. Many of them were eligible for the Payroll Protection Program loans and Employee Retention Credits that were enacted in April of 2020 and continue through 2021. We field questions and provide assistance to our clients regarding these programs as the rules from the SBA and Treasury Department are being developed and rolled out on a continuous basis.
Q: If you haven’t already made an appointment with a preparer, is it too late? If you have procrastinated are you in danger of missing the deadline and needing an extension?
A: No, it’s not too late to contact a tax preparer for your 2020 tax filings. The IRS has delayed the opening of the electronic filing until Feb. 12, 2021, which is three weeks later than normal. So, individual tax returns can’t be e-filed and processed before that date. However, it would be best to start now, organize your information and contact your tax preparer sooner rather than later.