2020 Taxes: A Year Like No Other

Calendar year 2020 may be behind us now, but the effects are still in full force as we enter the spring tax filing season. The effect on the overall income of individuals and businesses alike is like nothing we’ve seen in a very long time. Coming down from the best economy in our lifetimes to state and local economic shutdowns has been quite challenging. Many businesses have seen income and expense trends differ from normal so drastically this year making tax and financial planning so much more beneficial to their future success.

In efforts to reduce the impacts of the financial shutdowns on individuals and businesses, Congress passed both the CARES (Coronavirus Aid, Relief, and Economic Security) Act and the Consolidated Appropriations Act, 2021. These two acts have provided for many various forms of aid from individual stimulus payments to forgivable business loans. Many states have also created their own economic aid programs as well.

The aid provided for both businesses as well as individuals presents many questions relating to the treatment of the aid for tax and financial purposes. Some examples of questions are: What relief income is taxable? What related expenses are deductible? How are individual stimulus payments reflected on the tax return? These are very complex questions with answers that can vary circumstantially.

Furthermore, the IRS has announced that they intend to increase audits this year by 50%. This increased scrutiny and the complex issues created by the economic relief make this year one of the most important years to seek financial guidance from an external CPA.

If you are looking for a CPA or have any questions about accounting services, please contact me, Catherine Roe, at catherine@cowartroecpa.com or 504-252-0652. I would love to work with you!