2020 Annual Tax Letter to Clients
Dear Tax Client:
Wow, one totally unbelievable tax season barely ended and, on its heels, comes another with its own challenge’s thanks again to Covid-19! And for those of you who have been with us for years, or even a short time, there is no doubt that you have heard of our home/office remodel project. Well, after years of design, thought, review, and more review, we are thrilled to say we are finally HOME. I am sure you can imagine the good mess we have been dealing with as we get back in and settle down. All of this follows one of the most challenging tax years in our memory and that of our colleagues. The 2020 tax season for processing the 2019 tax returns just went on and on. And for a few clients, we are still muddling through their 2019 tax returns and follow-up correspondence. It seems to never end, but whether you can believe it or not, we are not the only ones. There are thousands of our colleagues who are voicing the same concerns that we have had to the IRS and their State governments.
The 2021 tax season for filing the 2020 tax returns looks to be yet another unforgettable year as well. Between the Coronavirus Aid, Relief, and Economic Securities (CARES) Act that passed in March 2020, and the Coronavirus Response and Relief Supplemental Appropriations Act signed December 27, 2020, we are, in many cases, still waiting for official guidance to be issued from multiple agencies. Thus far there has been little to no guidance on these major changes.
With all the variables and unknowns, you will find us once again asking all kinds of questions that we expect will lead us in the correct direction as we process the 2020 tax returns. The IRS continues to double down on preparer accuracy which has us requesting the 2020 tax engagement letter and organizer as a way for us to meet the “due diligence” requirements. Additionally, we will continue to scan and save all major documents you provide for your tax preparation. Not providing all your tax documents will only slow down processing and put you in personal liability with the IRS should there be questions or an audit. Bottom Line Accounting will only be responsible for documents and data provided and will not be responsible if you omit information.
As you prepare your tax documents, please remember that we need ALL pages of your tax documents, both front and back. Not supplying all pages slows down the preparation process. We will return all your documentation in your completed tax package. Should it be necessary to amend your tax return later because documentation was not provided to us at the time of preparation/e-filing, there will be a minimum amended tax return fee of $150. This fee could be higher if additional forms are required with the amending of the tax return. Please make sure you have all your tax documents before you ask us to e-file your return.
Identity Theft and Tax Scams. With the increase in identity theft and tax scams continuing to plague us all, the IRS is working hard to match data and cut the bad guys off before they take your identity or tax refund. As for those horrible tax scams, please remember that the IRS will never initiate contact with you via the telephone, e-mail, or by knocking on your front door. The IRS will never ask you to pay a tax liability with prepaid cards of any type. If there are issues with your tax returns and/or tax liability, the IRS will always contact you via letter correspondence first. Don't give crooks any information or fall for their tricks and scams. So, remember to either hang-up, hit the delete key, or shut the door on those scam artists!
Documents Typically Needed to Prepare a Tax Return. The following documents and information are good examples of what is generally needed to complete your tax return:
1) Copies of Social Security Card/Numbers for each taxpayer and/or dependent (if not already provided);
2) Copies of current and valid driver’s license or State ID cards for the taxpayer and tax spouse (a tool to help combat fraud);
3) IRS IP Pin (a six-digit number assigned to eligible taxpayers related to fraud and identity theft), if applicable or requested by the taxpayer and spouse;
4) Form(s) W-2 (wages, etc.) Pay stubs do not always have complete or accurate information. Therefore, the real thing is required and; additionally, it is illegal to preparer your return from a pay stub per IRS regulations;
5) Copy of your last pay stub of the year;
6) Form(s) 1099 (interest, dividends, miscellaneous, and non-employee compensation, etc.);
7) Schedule(s) K-1 (income/loss from partnerships, S Corps, etc.);
8) If you purchased your health insurance coverage through The Marketplace, you MUST have Form 1095-A to accurately complete your tax return. If you received Forms 1095-B or Forms 1095-C, please include those in your tax document although they are not mandatory;
9) Form(s) 1098 (mortgage interest) and property tax statements for houses and vehicles;
10) Copies of closing statements regarding the sale, purchase, or refinancing of real property;
11) Brokerage statements from stock, bond or other investment transactions, to include information regarding the original cost of stock and the date purchased for any stock sold during 2020;
12) Legal paperwork for adoption, divorce, separation, and /or custody issues;
13) All other supporting documents (schedules, checkbooks, etc.);
14) Any tax notices received from the IRS or other taxing authority;
15) Documentation regarding the Economic Impact Payments (Stimulus payments) received in both 2020 and 2021; and
16) A copy of your 2019 tax return only if it was not prepared by this office.
Free e-file. We are required to e-file your tax return and offer this service at no additional charge. There are many benefits to electronically filing; immediate acknowledgement that your return has been received, confirmation of acceptance/rejection, direct deposit in 10-20 days when refunds are due, and easy on-line payment options should you owe.
Payment for Services. To keep our costs and prices as low as possible, payment for services can be made with cash, personal check, and/or credit card payment at the time of service. Payment is due when your return is complete unless a payment arrangement has been requested and approved prior to tax preparation.
Call When You Need Help. Remember that we are available year-round and your tax preparation fee generally covers the additional time we spend helping you during the year. And getting those pesky notices to us as soon as you receive them can make addressing them much easier, faster, and less costly.
Engagement Letter/Tax Questionnaire. The engagement letter is an agreement which simply confirms the arrangements and responsibilities involved in preparing your tax return(s). All clients will be required to sign and submit a 2020 Engagement Letter prior to any tax return preparation work beginning. The 2020 Tax Questionnaire is meant to assist you in gathering information necessary to prepare your return and to act as a "tax road map" for us as we begin to prepare your return.
Schedule Your Tax Preparation/Interview Appointment Early. Due in great part to the Covid-19 pandemic and related tax changes, few returns will be completed in-person. We are encouraging all our clients to make appointments to drop-off their tax returns and we will either call or video conference with you when we are prepared to discuss your return. Or there is the secure drop-box located at our front door that is available for drop-off use. Many clients may want to take advantage of our secure on-line Intuit Link which allows for uploading tax documents in a secure portal. If you are new to this option, be sure to call and we will send the needed invitation to that link. For those few clients for whom an in-person tax appointment is necessary, we will require full mask (mouth and nose) wearing at all times during the appointment.
We are now booking tax appointments and encourage you to make your appointment as soon as possible. For those of you who are out-of-state, we encourage you to either mail or scan documents as soon as you have all forms and documents. Returns received after March 31, 2021, may be subject to a $25 surcharge and additionally may require the filing of an extension. Our policy is to process all tax returns in the order that they are received. Individual and business returns can take hours or days to complete. The return(s) ahead of yours may take longer than expected; however, know that we are always aware of your tax completion needs and work to meet filing deadlines for all clients. While we work quickly and efficiently, it is impossible for us to work around the clock. If it looks like all your documents are not going to be available, or we are not going to be able to complete your return by the due date, we will file an extension on your behalf. Extensions do not raise "flags" with the IRS, but incorrectly filed returns can. Please keep in mind that we are processing tax returns in-and-around our normal business and accounting work, which have their own separate deadlines.
There Is NO Extension to Pay Taxes Due on/by April 15. Please remember that there is NO extension to pay taxes that are due on April 15 of each year. Tax returns and tax payments are two separate events. If you think you might owe taxes then you may have to make an estimated tax payment. And while we may assist you in determining the amount of estimated tax payment you should make; we are not responsible if the estimate we recommend does not cover your tax liability. Paying a little more can be a safer bet than not paying enough and owing late penalties on top of taxes. To be considered paid on time taxes must be paid by April 15, 2021. Filing an extension to file taxes does not extend the time you have to make tax payments. When you pay after the due date, you must pay additional late payment penalties and interest.
Web-page: www.bottomlineaccounting.org We would encourage you to not only look today, but from time-to-time check back to see what information we might have to share with you. And, as always, we would encourage you to share this information with friends and family. You will find a page with tax information and links which might be very useful if you need tax information or need to make a tax payment during the year.
We know this letter has a lot of information packed in it, but we truly believe that this information is important and necessary as we work together for a smooth tax year for all our tax clients. Please do not hesitate to contact us via phone or e-mail if you have a question or need further assistance regarding your tax return or this year's tax organizer. Your tax situation and information will be handled with the same respect and carefulness that we would want our own to be handled.
When the bottom line counts, count on Bottom Line Accounting!
Nona D. Fisher Rebecca M. Lewis
Managing Partner Senior Accountant
Bottom Line Accounting Bottom Line Accounting
Office: (910) 424-0004 Cell: (910) 476-6748
e-mail: NonaFisher@aol.com e-mail: Rebecca.M.Lewis0309@gmail.com
Fax: (910) 424-1803