It is said that the only two certainties in life are death and taxes. Thankfully, one of these only occurs once in a lifetime. Tax season officially began Jan. 24. It culminates on Tax Day, which falls on April 18 this year.
The often-complicated process of filing taxes has become much easier. Software such as TurboTax and trusted accounting advisors are here to help. Bryan Reyes, of Jacksonville-based Pivot CPAs, is just that person. Reyes, based out of the Gainesville offices, has been a partner of the firm since 2004.
Reyes said this year may be particularly difficult for filing. The remnants of the COVID-19 pandemic have left the IRS backed up. Many people have yet to receive their tax returns from the previous year. With this in mind, Reyes offered a key piece of advice: File early.
“The earlier the better,” Reyes said. “Especially when working with a CPA.”
Despite the April due date, Reyes recommended a mid-March filing window to ensure an extension will not be needed.
Another of Reyes’s recommendations relates to the effects of the advance child tax credits sent out last summer under President Biden’s American Rescue Plan Act of 2021.
“From a compliance standpoint, a lot of families received this credit, and it’s especially important for families to look at. Letter 6419, which outlines this credit, is a key document to hold onto for filing this year,” Reyes said.
These letters, which were sent out beginning in December, are reminders that the money received in advance last year must be reconciled with their financial information this year. In this case, a Schedule 8812 must be filed.
There are other oft-forgotten contributions made as well. IRAs, interest and dividend income and rental income can sometimes get lost in the fray. New in recent years is cryptocurrencies, a revolutionary alternative to traditional money, but a large question mark when it comes to filing taxes.
“It’s the Wild, Wild West,” Reyes said. “Crypto really started last year. Reporting isn’t very good because of the many ancillary systems where you can trade it. It’s not like Charles Schwab.”
Cryptocurrencies like Bitcoin are subject to traditional tax laws. Each transaction must technically be reported when filing. Larger cryptocurrency trading sites such as Robinhood prepare statements for cryptocurrencies, but these are generally the exception. Most require a manual, personal audit.
Thankfully, no significant changes to tax laws take effect this year. The last major reform was the Tax Cuts and Jobs Act signed into law by President Trump in 2017. Those benefits will remain in place until 2025.
While nothing official has been announced yet, Reyes expects next year will be different. He is “keeping an eye on tax reform” somewhere around the end of this year, he said.
Although tax season usually ranks lower for most than holiday season or football season, its yearly occurrence, while inevitable, does not have to be difficult. With help from CPAs like Reyes, consider worries around tax season deducted. To reach out to Bryan head here!
By Ryan Walsh