Getting Ready for Tax Filing
Tax season 2021 is upon us. Our office has already officially “kicked off” the season by preparing tax organizers and sending out notifications to clients. Each year the tax season gets more complex. To help minimize paper, avoid confusion, and streamline the process for efficiency and accuracy, we’ve collected everything you need to know about the 2021 Tax Year Filing Season so we can complete eFiling of all your tax returns.
2021 Tax Season: A Tax Season Like No Other
Even before the pandemic, the backlog of tax returns and related paperwork was staggering. According to Wall Street Journal’s Headaches and Backlogs Loom as Tax Filing Season Nears Again article, in late December, the IRS still had 6.3 million unprocessed individual tax returns and 2.3 million amended tax returns unopened. That means the IRS is unlikely to work on its backlog before new returns are filed. Plus, the Treasury reported they have approximately one employee per 16,000 tax-related phone calls.
Given the backlog of tax returns and limited manpower (coupled with pandemic-related absences), wait times are horrendous for phone, fax, and mail correspondence. That means we need to ensure we have accurate information for electronic tax filing. The good news is that you can help make this process easier and more efficient.
If the backlog isn’t enough to complicate things, there’s still pending legislation that could impact IRS and FTB filings. As we wait for ruling and clarification, we all need to be patient and flexible if and when changes occur. There is one thing we do know — the 2021 tax deadline. Filing dates are firmly set for:
- Tuesday, March 15th for business tax returns
- Monday, April 18th for individual tax returns
Securely Send Documentation via SmartVault
Hopefully, you’re already comfortable using SmartVault, our secure portal for exchanging documents. It’s the most secure and expedient way to send key documents required to file your tax returns and correspond with the IRS and FTB. If you haven’t used it yet, now is the perfect time to start by following the SmartVault tutorial and creating your account.
For the upcoming tax season, you’ll be uploading documents to your 2021 Tax Year folders. Make sure you provide copies of all your 1099’s, 1098’s, and other tax-related documents so we can ensure the accuracy of your returns. We can’t rely on amounts provided over the phone or “guesstimates.”
Online Accounts with IRS & FTB
The best way to manage your taxes is through online accounts directly with the IRS and Franchise Tax Board.
Why is it important for online access?
Having access to your online tax information will make it easy to do the following:
- Confirm previous tax payments
- Retrieve your Advanced Child Credit letter and Stimulus Payment letter
- Check for outstanding tax balances and notices
- Access prior-year tax transcripts, if necessary
- Make tax payments
Important Note: Both the primary taxpayer and spouse should set up their own accounts.
How to set up access to your online tax accounts?
If you haven’t already set up access to your IRS and FTB accounts, follow these steps to create your IRS and FTB accounts. You’ll need an email address, social security number, mobile phone number, and one financial account number to verify your identity. For married clients, we highly recommend that both individuals set up their own IRS and FTB accounts. This ensures you have access to any and all official tax notifications.
What do you access & review for Tax Season 2021?
Once you have accessed your IRS and FTB online accounts, you’ll want to:
- Confirm estimated tax payments.
- Letter 6419: Advanced Child Tax Credit Payments
- Download the letter
- Upload to SmartVault
- Note: you’ll also receive this letter via snail mail
- Letter 6475: Economic Impact Payment (Stimulus Check)
- Download the letter
- Upload to SmartVault
- Note: you’ll also receive this letter via snail mail
- Check for any prior year outstanding balances or notices
- Make tax payments
- We advise that all tax payments should be made online.
- Once you’ve made the tax payment, you’ll see a page with a confirmation number. Keep a copy for your records and upload it to SmartVault.
- In case you have difficulty getting into your online accounts, here are direct payment links:
Individual Tax Organizers Due March 18th
Your tax organizer is now available via SmartVault. Please download and begin organizing all your documents we’ll need to accurately file your federal and state taxes. Please sign your engagement letter (pages 2 and 3 of your organizer) and upload all tax documentation to your SmartVault 2021 Tax Year folder.
To file your taxes by the April 18 deadline, we’ll need your individual tax organizers completed and uploaded to SmartVault no later than Friday, March 18th.
Helping You Manage What Matters Most
At ARR & Co, we know that your financial life is more than numbers. By using a holistic approach, we help you minimize tax exposure, maximize cash flow and preserve wealth. Thank you for the opportunity to serve you.
Frequently Asked Questions
The IRS projects that the majority of individuals will receive payments in a similar timeframe as in prior years. When you sign up for direct deposit and since we file your tax returns electronically, most refunds are received within 21 days.
There are several pieces of legislation that may affect tax returns. Tax filing deadlines have been set. If the pandemic has taught us anything, it’s to be flexible!
The tax season typically lasts from January 1 to April 15 of each year. The IRS tax season officially ends this year on April 18th. In order to have enough time for us to prepare your tax return, we need your individual tax organizer submitted no later than March 18th. If we don’t receive it in time, we’ll need to file for an extension.
If you don’t think you’ll be able to send us your tax organizer information by March 18th, please alert us so we can prepare an extension. At that time you’ll need to pay any anticipated taxes in order to avoid penalties. Typically fines are calculated based on your outstanding taxes, usually 5% for each month your turn is late for a maximum penalty of 25%. When you work with ARR & Co, we strongly encourage filing extensions rather than missed deadlines.
