There have been changes enough this extremely ongoing season — so much so that it seems hard to believe that tax reform only kicked in on Tax Day 2019. Did the second full filing season of the Tax Cuts and Jobs Act run smoother?
Kerry Freeman, an Enrolled Agent at Freeman Income Tax Service in Anthem, Arizona, found this second year harder: “So much misinformation that clients are not bringing all the documents like they have in the past” for informed choices, Freeman said. “Many are saying even before the appointment, ‘I’ll just use the standard deduction.’ I’d rather see a hundred receipts and make the proper election for the taxpayer than miss out and be seen as not doing my job or worth the value I create.”
“Last year was a year of firsts,” said Lance Christensen, a CPA and partner at Margolin, Winer & Evens in New York. “We were implementing the new tax reform for the first time and awaiting guidance from the IRS and from many states. We were identifying new planning opportunities to take advantage of some of the benefits from the tax cuts while also trying to avoid the pitfalls from the tax increases.
“This year, while we’re still awaiting guidance, we’re more familiar with the changes because we’ve done it before,” he said.
“One season of experience under our belts makes things easier,” said Robert Seltzer, a CPA in Los Angeles. “The forms have been changed to make them a bit more user-friendly. The 1040 is more substantial, with more line items and fewer unnecessary supporting schedules.”
“As the preparer, we’re working with this law for the second time but it still has a number of complicated parts,” said Michael Eisenberg, a CPA with Top 100 Firm Squar Milner, Encino, California.
Added Chris Hardy, an EA and managing director at Georgia-based Paramount Tax and Accounting, “It has been easier based on sheer volume and understanding how all the intricacies fall.”
Except for?
QB what?
In the summer of 2019, preparers reported that the TCJA added time to most aspects of tax prep engagements, from client meetings to assembling documents to doing the forms themselves.
Though many said they spent extra effort in early 2019 educating clients on reform, others said they wished they’d spent more time on the task.
“A bit easier, in that there’s a little more guidance on some issues,” said Twila Midwood, an EA with Advanced Tax Centre, in Rockledge, Florida. “But the biggest hassle for us is the change in the 1040 itself again. Reviewing the return with clients is more of a challenge this year due to these changes.”
“For returning clients, we find it much easier for us, and clearer to the client, to review the return using the comparison worksheet in the software,” Midwood said.
“It’s a lot easier but the public education on what exactly is going on is still a work in progress, as clients simply don’t fully understand what’s changed,” said Doug Radtke, a CPA in Mountain View, California. “The more sophisticated clients eligible for the 199A QBI deduction are still figuring some of the nuance, such as criteria for specified service trade or business.”
Never the same
Different year — and still many new changes.
“Now there are two additional laws that we need to be aware of. The SECURE Act, which impacts retirement accounts beginning this year,” Eisenberg added. “Clients have heard about that and are confused as to which year it applies to and how and when will it impact them and their tax situation. And the new California law AB-5 impacts independent contractors versus employees.”
As the pandemic and its economic havoc play out, reform may actually fade into the past as one of the simpler changes preparers had to deal with in the first half of this century.
“The facts change from year to year,” Christensen said. “It’s important to remember that so we cannot be complacent and assume everything is the same.”
