By: Editorial Staff, Date: April 13th, 2021
In order to combat the economic fallout of the coronavirus pandemic, Congress recently passed the American Rescue Plan Act of 2021 (ARPA) – a $1.9 trillion stimulus package that includes a number of changes to the tax code. With the April 15 deadline to file taxes right around the corner, many organizations – including the IRS itself – are now scrambling to catch up to prepare for what many are predicting to be the most complex tax season in the country’s history.
The American Rescue Plan Act of 2021 includes several changes to the tax code, including changes regarding home office deductions, child tax credits, and medical expense deductions. While these changes are meant to help ease the financial burden of US families who have seen their income affected by the pandemic, such massive changes so close to the tax filing deadline have created a real headache for the IRS, accountants, and tax software providers alike. In fact, the IRS has warned that it may take as much as forty-five days to reprogram its computers to account for the changes to tax law.
To create more time to prepare for this unusually complex tax season, the IRS has pushed back the tax season filing date for federal taxes to Monday, May 17. The states of Pennsylvania and New Jersey have done the same. However, most states are still requiring state taxes to be paid by the normal deadline of April 15.
While business owners and employees can take comfort in the fact that most of the changes to the tax code created by ARPA are meant to save them money, it is still a good idea to begin preparing your taxes as soon as possible to account for any errors or confusion that these last-minute changes might create in what is predicted to be the most complex tax season ever.
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The aggressive focus against tax evasion and other criminal activities around the globe is likely to continue. In the U.S., the crackdown on taxpayers who fail to report offshore financial assets and accounts remains to be a top priority for the Internal Revenue Service (IRS) Criminal Investigation Department, including non-compliant virtual currency that should be disclosed under the expanded cryptocurrency reporting.