Many Americans are celebrating the arrival of the $1,400 stimulus checks authorized by the $1.9 trillion COVID relief. But every silver lining, if you'll allow a reversal of the usual cliche, has a cloud.
And professional tax preparers are feeling the rain.
The checks, as well as one-time provisions offering tax forgiveness for a large portion of unemployment benefits and an increase in the child tax credit, are good financial news for taxpayers. But the timing is awful for the people who prepare taxes.
The COVID relief windfalls come four weeks after the Internal Revenue Service had begun accepting returns. That’s led to a scramble among tax preparers to re-do taxes and/or file amended returns.
Tax pros told Financial Planning the result is a tax season “dumpster fire” filled with “chaos.”
For its part, the IRS is overwhelmed too. The agency has “asked preparers to hold back filing any amended 2020 returns … until the IRS figures out all of the changes they need to make,” a business tax specialist told the magazine.
Meanwhile, online tax preparation software systems are moving quickly to update their systems to account for the changes, according to CNBC.
While the IRS, software makers, and others digest the impact of the COVID relief bill, there is a bit of good news for tax professionals. The IRS extended the filing deadline to May 17.
