Year-End: What you Need to Know for MGA’s Upcoming Year

December 16, 2020

Dear Clients,

2020 has been an unusual tax year and we are not sure how different 2021 will be. We are all healthy and safe and looking forward to working with you to file your taxes. As we all experienced in 2020, many things are subject to change and our process may become fluid again this year.

The compliance related to accurately and thoroughly reporting on new laws will require an increased level of communication and documentation. In light of this, we are implementing a new process to help you gather and organize your tax information prior to delivery to our office. For those of you who used to receive the lengthy comparative paper Organizer, we will no longer be providing it as we have determined that our new process will provide the same information while saving you time and providing us with a more complete and organized set of information.

If you routinely deliver your documents to us in a paper format, we will be mailing a Tax Document Organizer to your home. This is a physical folder that we expect back with your paperwork filled out and your documents organized within. If you routinely deliver your documents to us in a digital format, your folder will be in a digital form in your portal.

We would also like to alert you to some other changes that we have planned:

  • Masks will be required to be worn at all times in our office
  • Hand sanitizer will be available and should be used upon entering our office
  • Meetings will default to Zoom (remote video conference over the internet) or a phone call
    • You can now schedule meetings through our website
    • Documents for remote meetings must be in our possession at least 48 hours in advance
    • Should you require an in-person meeting it will be limited to 30 minutes
      • Those coming for in-person meetings will receive temperature checks upon entering our office
  • Unscheduled drop-offs and pick-ups at the front desk are still available with minimal contact
  • Due to Covid-19, the government passed several large stimulus packages. We will include additional questionnaires to be completed with the new Tax Document Organizer

Our goal is to complete as many returns as possible by the normal filing deadline and we are requesting that you make every effort to submit your documents to us in 100% complete package by March 20th. As always, we will prioritize work on files that are delivered in a complete format.

For those of you with complex returns, including late arriving documents, an extension will more than likely be required. We do expect to have all of your other information in by March 20th and your remaining information in by September 20th at the latest.

The filing deadline and our extension policy may both be affected by Covid-19. We will alert you to this year’s extension policy in mid-March if it applies to you. Our policy may include a deposit and agreement in order to file your federal and state extensions timely.

As a reminder, if you have self-employment income or rental property, you may be required to file 1099’s. If payment was made via a credit card no 1099 is required. These forms are required if:

  • You paid a subcontractor $600 or more for services performed
  • You paid rent on a business property
  • You paid an attorney for business or rental related services
  • You received mortgage interest income

For those of you not on a service agreement with us, our office can prepare these forms for you for an additional fee. This year the base fee is $150 with a $15 charge for each form. This includes preparation, e-filing, and mailing/emailing to recipient. You can prepare these forms yourself with any number of programs that are available. If you would like us to prepare these forms, please let us know no later than Monday, January 4th, 2021 so we can forward you the required information form. All 1099’s must be filed by the end of January and we require all information in our office no later than January 15th.

Please be aware that subcontractor 1099’s must be filed on Form 1099-NEC (not 1099-Misc) like in previous years.

If you are self-employed or own a business and received PPP funds, please remember that your loan repayments will begin 10 months after the end of your covered period – if your loan is not forgiven. Please discuss your situation with your banker and move forward with your forgiveness process as soon as possible. The tax consequences of your PPP loan and its forgiveness are still being determined by Congress and the IRS. For those that received loans, grants, and/or advances please be aware that this increases the complexity of your return and in turn increases your fee.

Stay safe and healthy,