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TaxBuzz Chat: Into the Weeds of Tax Season

TaxBuzz Chat: Into the Weeds of Tax Season

It's official: #TaxBuzzChat has started breaking the internet (sort of).

This community has multiplied significantly over the past few years, and we're thrilled that so many of you continue to join our discussions.

That being said, our monthly chats have grown in size to the point where including all tweets in the recap will crash most browsers. From now on, we'll pull a selection of the tweets from each question which got the most engagement (rather than a full write-up of every tweet). 

Our February conversation - hosted on our Twitter account @TaxBuzzOnline - was as busy as ever, as we invited pros across the country to join us to discuss questions such as:

  • With the delay in the start of e-filing and the ongoing pandemic, do you expect the IRS to extend the filing season? If so, for how long?
  • With the last 4 - 5 years bringing a constant stream of tax law changes, extensions, and complications, what percentage of tax returns do you believe are actually done correctly?
  • With states like Washington and Minnesota now proposing wealth taxes on higher earners, do you expect major migration of high-net earners and corporations to no- or low-tax states?
  • President Biden has proposed increasing the capital gain tax rate. Do you think it will pass? And if it does, how will it affect the economy and Wall Street?
  • According to the Tax Policy Center, only 1.6% of all individual returns included a deduction for IRA contributions in 2018. How would you change tax policy to encourage more retirement savings?

Thank you to all the members of the #TaxTwitter community who participated in our February chat - and welcome to all our new attendees. Make sure to check out the full recap below for top highlights of our conversation and sign up to receive our chat invites and recaps via email here. (If you have any questions about the new recap format, feel free to Tweet us.)

@TaxBuzzOnline will be hosting our next #TaxBuzzChat on Wednesday, March 3rd at 10am PT/ 1pm ET. Check back for updates to make sure you don't miss out on the conversation and Tweet us if there are topics that you'd like to chat about in the future.

Q1. Now that IP PINs are available to all taxpayers, how are you advising your clients? #TaxBuzzChat pic.twitter.com/NPdCzGE3DS

A1. My January client newsletter explained what was going on and recommended that unless they had a specific issue to wait for a while. And in the meantime find the info for the KBA questions. #TaxBuzzChat

A1. I don't do individual tax work, but I'm planning on doing this for myself. Unfortunately, I've been a victim of identify theft so I'm big on adding layers of security (2-step login, authentication, different & complex PWs on every site) #TaxBuzzChat

I'm letting clients know and encouraging them use it if they've had issues in the past. But I'm not saying every client needs to sign up.#TaxBuzzChat

A1. #TaxBuzzChat - IP PIN can be a double edged sword - #TreadLightly - just because your FB page was hacked does NOT necessarily mean your identity was compromised.

Maybe to get them next year?

A1 #TaxBuzzChat I don't plan to initiate this convo with any clients. My concern is that this is a forever decision. Do you/they want to be locked out of filing should they lose that number, that year's letter, etc. I think it's a valuable service, but not everyone needs it.

A1. We'll let them know they are available but won't push them. Hard enough getting annual letters from the clients that have to have them due to ID theft. #TaxBuzzChat

Also, since this is the first year available, I'm hesitant to be the IRS's beta testers, especially for 2020 #TaxBuzzChat

A1. This season has already presented challenges for taxpayers & the tax pros. Discussion of IP PINs for taxpayers should be a part of the educational process, especially for vulnerable taxpayers. We start slow and build. It may be the future of filing anyway. #TaxBuzzChat

Q2. How are you dealing with the late February 12 start of e-filing? Is it causing you any problems? #TaxBuzzChat pic.twitter.com/ZLpmIefq2i

A2. Most of my clients don't file early. I'm advising the ones who do to wait---especially if they received unemployment. I'll start e-filing returns without unemployment on Monday 2.15 probably. #TaxBuzzChat

A2. I do have a few clients that have already completed their information submission, so I suspect I will need to be sending some "soothing" emails very shortly. Most of my clients are okay with waiting though, thankfully. #TaxBuzzChat

A2. When actual e-filing starts isn't the problem to me. But it's a problem for taxpayers who I'm telling it could be a month til they get their money. "Well, last year it was only 2 weeks?"

Sure, but tax season hasn't even started yet. 🙄 #TaxBuzzChat

A2: THIS IS SOOOOO AWESOME. let's make the tax season even more compressed. Plus you have congress wanting to make changes again..... #TaxBuzzChat

I told all my clients the word of 2021 is: PATIENCE

I'm not looking at or starting a tax return until next week #TaxBuzzChat pic.twitter.com/5foKr0iWJG

A2: I don't have any clients that are ready to file 2020 anyway, so no big deal. I would like the option to e-file prior year returns while waiting on 2020 to open though. #TaxBuzzChat

A2. Even when tax season does open up, I will hesitate to file anything. Seems we keep getting new guidance daily. 3rd round of stimulus? State nonconformity? #AfraidToFile #TaxBuzzChat

A2. Since another COVID relief bill is likely on its way, the delay allows time for Congress to make more 2020 tax law changes without amended returns. I'm good with it. I'm not transmitting anything until we have a better handle on new legislation. #TaxBuzzChat

A2. We'll have a few clients grumble. Mainly it's the extra administrative step to follow back up with returns we've already completed. We'll have a central person recalculate once we get the green light, confirm returns are still good, then upload for processing. #TaxBuzzChat

A2. No, my time is spent on filing business returns. I'd rather IRS be ready to accept than not be. They have created many of the problems of this year and don't need to cause anymore. #TaxBuzzChat

Q3. With the delay in the start of e-filing and the ongoing pandemic, do you expect the IRS to extend the filing season? If so, for how long? #TaxBuzzChat pic.twitter.com/9yWEWLDIb7

A3. When it comes to the government, people who expect nothing will never be disappointed. #TaxBuzzChat

A3. Oh they'd better. Otherwise, there's gonna be A LOT more extensions than normal both on the business side and the personal side.

Should be 6/15 for 1120Ss and 7/15 for 1040s. And they need to make up their mind on that SOON, not on March 14th. #TaxBuzzChat

A3. Im hoping so. Im not rushing thru any tax returns this year. I told most of my clients to expect extensions any way because of the late start and the extra care I want to put into each return. #TaxBuzzChat

A3. I actually think they will extend the filing season. But, for everyone who's opposed to this, nothing's stopping you from filing on your regular schedule. It just gives more time to people who need it.#TaxBuzzChat

A3 #TaxBuzzChat By now, we all better be ready for remote mtgs. I'm team #noextend. I want to bust out tax season and be "done," and only have returns outstanding that I choose to put on extension. 2/

There's zero reason why information returns shouldn't get an auto extension. Totally agree here. #TaxBuzzChat

A3. I would like a statutory change where there is one permanent later deadline with no extensions. Canada does this successfully. #TaxBuzzChat

A3. I would think it is almost a sure thing. The conditions that caused the July 15 extension last year are still with us. #TaxBuzzChat

A3. Know the AICPA and NSA are petitioning the Treasury and Commissioner to consider extending the season. Frankly, an extension of time until October 15, 2021 for filing Form 1040 exists. (1/2) #TaxBuzzChat

A3. Tax Professionals need a break. We are worn out from a 2020 that found us filing returns, dealing with EIPs and PPPs all year. Give us a break and make 4/15 it. Get us back to normalcy. (2/2) #TaxBuzzChat

Q4. Why do you think tax preparers are still using Intuit-Lacerte software while it appears Intuit is a direct competitor with Turbo-Tax for tax preparation clients? #TaxBuzzChat pic.twitter.com/Hpna7N8vjH

A4. I use Intuit's ProSeries product and no matter how much we tell the general public "all people are tax people" there will FOREVER be a need for tax pros. Its the reason why Intuit is offering "DO IT FOR YOU" service this year...#TaxBuzzChat pic.twitter.com/z3Yk1YnTUm

A4. I don't use Intuit-Lacerte software, but I don't worry about Turbo-Tax being a direct competitor. Preparers are going to use the software that works for them. If the Intuit product works for you - go ahead and use it.

I think the debate relates to helping finance a company that is turning around and competing with you. Or at least do pros perceive it that way? It seems not much. #TaxBuzzChat

A4. But they tried it? They are taking market share from somewhere.

But yes, there is a reason independent #accountants are consistently ranked as the #1 advisor. They deliver. #TaxBuzzChat

I have no idea how much ProSeries costs? But I don't have a high-volume practice either & I use Ultra-tax's pay-per-return pricing. Allows me to have a high quality program at a reasonable cost. #TaxBuzzChat

A4: #TaxBuzzChat I don't care either way. If the user can't maximize the software they are using or interpret the rules correctly, there will be a market for CPAs/intuit/lacerte.

In my case, I don't consider myself in competition with Turbotax or Block, I get business taxes and the individual returns are a bonus. Since I love the software not really an issue with me (except getting new clients for them.)

A4: While not happy Intuit puts Turbotax in direct competition with Lacerte, I like my software (used it for 30 years & love the diagnotics) & actually get clients who used Turbotax before, made mistakes & found they didn't know as much about taxes as they thought. #TaxBuzzChat

Q5. With the last 4 - 5 years bringing a constant stream of tax law changes, extensions, and complications, what percentage of tax returns do you believe are actually done correctly? #TaxBuzzChat pic.twitter.com/U7vUWZl5pN

A5. Im hoping at least 98% of my returns are done correctly lol #TaxBuzzChat pic.twitter.com/aHYTANRhi9

A5. Given the complexity of our current tax code and the sheer number of tax changes over the past few years, individuals who are not working with good tax advisors are much more likely to make mistakes on their tax returns and/or miss out on potential tax savings. #TaxBuzzChat

A5. Hell, I had a year where I realized the next year that I didn't even prepare MY OWN tax return correctly. But hey, that's what 1040-Xs are for, amiright? (Promise I'm actually a good tax preparer. But hey, we're humans, not machines.) #TaxBuzzChat

A5. Good point. With the exception of all the great tax pros here on #TaxBuzzChat, I'd say the majority of returns probably have something wrong with them. There's just so much to keep up with and too many preparers rely on the software to catch everything.

A5. Define "correctly". If you mean every single 'i dotted & t crossed', then I would say 0%. But if you mean 'materially correct', probably 75%. (Of course, all the TR's I prepare are perfect. 🤪) #TaxBuzzChat

Yay! Audit roulette!#taxbuzzchat

Ages ago, I was on a team that worked all summer on a huge consolidated 1120. Wrap up meeting w/the prez of biz & he says "one thing I can tell you w/absolute certainty. there is at least one mistake in that return." Little ole tax senior me was 👀👀.

A5. I would think the percentage is very low. Very, very low. #TaxBuzzChat

Q6. Given all the security issues and fraud using the internet to transmit tax returns, do you believe the IRS should develop another method of transmission or security measures? If yes, do you have any suggestions? #TaxBuzzChat pic.twitter.com/AUzZGDECg3

A6. Or Amazon drone delivery. #TaxBuzzChat

A6. Some great responses here (carrier pigeons @andreacpa0 , Amazon drone delivery @leereams2 ). All kidding aside, I agree that the IRS needs to get away from requiring fax submissions - being able to upload 2848 IS a big step #TaxBuzzChat

A6. Let's get the fax machines out of the IRS first, and then let's talk about massive upgrades on security measures, shall we? #TaxBuzzChat

A6. The problem isnt always the IRS... Its tax pro's who dont have a good understanding of the security protocols they need to have in place BEFORE they start preparing tax returns accepting secure data. There needs to be more emphasis on this in addition to ethics #TaxBuzzChat pic.twitter.com/CQLvMXg8vs

A6. I agree, IRS needs to get away from faxing, faxing, faxing. I've had agents ask me if my fax is a regular old fax machine (not an efax) before they'll agree to send me a 147C (substitute EIN) letter. I always say YES, when asked ;) #TaxBuzzChat

A6. Yes, just like Practitioner Priority Service and Tax Pros on https://t.co/bwFaGM2dVp, IRS should open an e-file portal only for tax pros w/ PTINs, quickly identify where fraudulent returns originate. (1/2) #TaxBuzzChat

A6: My personal feeling is that the IRS has a pretty good internet security for transmitting returns; I hear people attempt to hack them 5-10 times a day and they have all failed (that we know of.) They have enough development problems elsewhere. Leave it alone. #TaxBuzzChat

Q7. Do you have a favorite or unique procedure you utilize to guard against your clients' returns or IDs being hacked or stolen? #TaxBuzzChat pic.twitter.com/XtfRW6MnVP

So he's uh... tax deductible now.... right? #TaxBuzzChat #TaxTwitter @BadTaxTake

A7 #TaxBuzzChat I use @Dashlane for a #VPN and @SmartVault for a secure file portal. I tell clients that they should not e-mail me documents. Most of my clients listen, but a handful can't handle more technology. I still accept porch drop-offs from some.

A7. No e-mail attachments. No sensitive info collected using cloud-based forms. Portal/cloud storage is temporary only. Everything gets archived locally (stored offsite) at the end of season and extension season and again at the end of the year. #TaxBuzzChat

A7. Never accept emailed attachments. They must always upload documents to the client portal. PERIOD... #TaxBuzzChat pic.twitter.com/QJCT4uLxAk

A7. I lift weights. #TaxBuzzChat

A7. I have two computers. One is dedicated solely to my tax software. No email on that computer or internet browsing. Only connect to the internet while transmitting returns and try to limit that as much as possible. #TaxBuzzChat

Q8. Once this pandemic is over, will you go back to in-person appointments or will you continue with virtual appointments? #TaxBuzzChat pic.twitter.com/qntWEc8uWa

A8. I've always been mostly virtual so Ill keep it that way. I'm ok not having people in my office. #TaxBuzzChat

A8. My firm has always been almost 100% virtual - mainly because my clients are literally all over the WORLD. I do try to see/meet my MA, NH, CT based clients at least once a year (even if just for lunch). That's something I'll definitely do once pandemic is over. #TaxBuzzChat

A8. Mixed bag. I'll certainly have more in-person appointments in 2022 than in 2021, but I'll have less in 2022 than I did in 2019 and before. Love the convenience of Zoom and don't know how I ever lived without it. #TaxBuzzChat

A8. #TaxBuzzChat I like walking upstairs to go to work instead of driving to the office, but I do miss my in person visits. (Especially some of my older clients who bring me candy and cookies!) And sometimes, the in person visit helps with some of the tougher emotional issues.

Q8. We will do whatever our clients prefer. However, we do like the virtual meetings and find them more efficient. #TaxBuzzChat

A8. #TaxBuzzChat If I did in person by request, I'd still be meeting over half of my client base. I had to make a firm, across the board no. That's been hard, but I'm afraid of becoming a super spreader and getting one of my clients sick.

A8 #TaxBuzzChat Oh yeah, hugs! I miss those. I had forgotten what those were.

I'm changing my answer! I'll go back to encouraging in-person appointments.

A8. #TaxBuzzChat I have severe Zoom fatigue so I think I will do as many in person meetings as soon as possible, the settle back into a normal amount. It is much more convenient.

Q8. W/a few, rare exceptions, I've been virtual for almost 6 years now so no changes for me. (except maybe I'll leave the house occasionally and finally take a vaca) #TaxBuzzChat

Love wearing a jacket on top and yoga pants on the bottom with flats - virtual all the way. #TaxBuzzChat

Q9. With states like Washington and Minnesota now proposing wealth taxes on higher earners, do you expect major migration of high-net earners and corporations to no- or low-tax states? #TaxBuzzChat pic.twitter.com/ezBai8lE2w

A9. With the increasing availability (and acceptance) of working remotely, I would not be surprised to see some tax-motivated migration for individuals. Corporations are a different story, not sure they will let the tax tail wag the dog... #TaxBuzzChat

A9. If a California client is going to sell a non-California source asset, they might want to at least consider saving 13.3% in state income taxes by changing their residence/domicile before the sale. #TaxBuzzChat

A9. I expect people will consider it, but tax is just one variable. You have to consider where your biz is located, will your biz go with you, cost of living, property taxes, insurance, etc., etc., etc. #TaxBuzzChat

A9 #TaxBuzzChat Will it drive ppl out? Not sure. I've run the numbers for myself of moving to a low/no-tax state. Not anywhere NEAR worth uprooting. My life and extended family are here. Some will leave, many won't. 2/

A9: In the short run, sure. However, eventually those states will realize that they have a new source of tax revenue, which they will likely try to tax. States need money to operate. They will get it eventually. #TaxBuzzChat

A9. MA, for instance, has been trying to pass a "millionaire's tax" for years. I wrote an article on this for State Tax Notes "Should Massachusetts Adopt a Millionaire's Tax?" From a policy perspective, these taxes don't always produce the anticipated revenue. #TaxBuzzChat 2/2

A9. I don't think it's going to be what causes someone to move, but people who are already planning to move will take this into consideration. #TaxBuzzChat

#TaxBuzzChat A9: the markets always adjust based on cost / benefit paradigm... Lots of states have "wealth taxes." Maybe it's not branded that, but something like property tax is essentially a wealth tax.

Q10. President Biden has proposed increasing the capital gain tax rate. Do you think it will pass? And if it does, how will it affect the economy and Wall Street? #TaxBuzzChat pic.twitter.com/cIixiFJqKz

A10. I think it's scary right now to have money. I still don't think anything drastic ends up happening with the tax code, but we'll see what happens if this $1.9T relief bill ultimately goes through. Could be a whole new ballgame in a hurry. #TaxBuzzChat

A10. Stock market players are going to continue to buy and sell and trade. This wont impact them much IMO... The ones I encounter dont take taxes into their strategy now so why would they if the rate gets hiked? #TaxBuzzChat

A10 #TaxBuzzChat Will the rich then day-trade more knowing buy-and-hold doesn't help their taxes? Or are the low/middle-income taxpayers the ones who would day-trade more absent tax benefits to hold 1yr? Curiouser and curiouser... 2/

A10. Greater than 1 yr is NOT long term. LT is (at least) 10 yrs. Will that slow the inherently evil 'get rich quick at any cost' mindset ... IDK but clearly a complete reset is in order and a long drawn out painful recession is one way to accomplish that objective #TaxBuzzChat

A10 #TaxBuzzChat Fascinating insight Justin. It all comes back to incentivizes. Yep, they'll just die with the stocks and plan for their heirs to get a step-up in basis just like their rental properties.

A10. Wall Street is Not the economy. Yes! pic.twitter.com/lTcF67itI1

Q10. I would like capital gains to be taxed at regular rates; however, the amount of gain taxed would be reduced over time the longer one holds the asset. The law should encourage true long-term investment not speculation. #TaxBuzzChat

Q11. According to the Tax Policy Center, only 1.6% of all individual returns included a deduction for IRA contributions in 2018. How would you change tax policy to encourage more retirement savings? #TaxBuzzChat pic.twitter.com/jIXHrwlEkC

A11. Partnering with financial advisors that aren't used car salesman. Seriously having a person to refer my clients to that actually takes into account their entire situation instead of trying to earn a commission is key #TaxBuzzChat

A11. I may be a little rogue on this, but I don't know that we do need to encourage more retirement savings. There are so many more ways to invest in ourselves that are outside of just IRAs. "Best tax advice" isn't always "best advice," and I try to keep that in mind #TaxBuzzChat

A11. It's hard to save for retirement when you're struggling to pay bills. Maybe more incentive (ie: a credit?) for small employers to provide a matching contribution? #TaxBuzzChat

A11 #TaxBuzzChat that employers are now motivated to offer 401k's//SIMPLE or SEP IRA's.

We have such a short-sighted culture that doesn't know/practice deferred gratification. While I concede many CAN'T afford retirement savings, still many more CHOOSE not to prioritize it. 2/

A11. Yes people don't get it. Some even walk from stock options now without executing. We have several 401k millionaires in the making. #TaxBuzzChat

A11. But does that percentage tell the whole story? What about 401K contributions and Roth contributions? I think the percentage of retirement savers is much higher. #TaxBuzzChat My big issue is to get lower income people to have a savings nest egg (before retirement savings.)

I 100% agree! A "one-plan" policy that applies to all individuals with some type of phase-out would be great. Employer's could make a contribution to the employee's fund, but the fund belongs to the employee. #TaxBuzzChat

A11. I see the years of IRAs, a thing of the past, replaced by Employer Plans, with simplified recordkeeping and greater tax benefit for employers setting up retirement plans for employees. #TaxBuzzChat

A11: Remember IRAs aren't 401ks; there are many people running retirement savings through there. I would get rid of the income thresholds on Traditional & Roth IRAs and raise the total amount to $10000 per year ($15000 if over 50). #TaxBuzzChat

Q12. According to the CBO, GDP is expected to return to its pre-pandemic size in mid-2021 and the labor force is forecast to rebound to its pre-pandemic level in 2022. Do you expect a pickup in business as the economy recovers? #TaxBuzzChat pic.twitter.com/9F3GGCkzOl

A12. Not mine. It's already overwhelming.

BUT I do hope that other businesses, storefronts and service businesses rebound. People need their jobs back.#taxbuzzchat

A12. Do I expect a pickup in my business? Or business in general? I'm plenty busy already. But some of my clients - I look forward to them getting back to work, if they don't go under before then. #TaxBuzzChat

A12. Yes, the new issue to resolve is living in one state, working remotely for a company in another. Which states' long arms reach out to the remote employee? (Like NY)#taxbuzzchat

I think it will depend on how euphoric people are when they feel the vaccine makes it safe again. So many people are "stir-crazy" now in CA that I am sure people will be flocking to movies, restaurants, comedy clubs and sports bars again as soon as they think its safe.

A12. We are getting more calls now than we can ever handle. More business isn't the issue. More qualified tax pros to hire is the issue that is limiting our capacity right now. #TaxBuzzChat

A12 #TaxBuzzChat Wow, congrats Suzanne!

A12. What @adammarkowitzEA said. We're up now helping with PPP, ERC, etc. What I do think it does is prevents a decline in business - were this pandemic to continue indefinitely, we'd be watching more businesses closing doors permanently. That's bad for everyone. #TaxBuzzChat

That's a wrap #TaxTwitter! Thanks to all of you for joining this month's #TaxBuzzChat. Feel free to keep chatting today. Recap will be up soon -- Join us for our next chat on March 3rd, 2021. Happy holidays!

-- TaxBuzz.com (@taxbuzzonline) February 3, 2021

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Lauren Detweiler

Lauren Detweiler

I am equal parts marketer, traveler, and writer, and I've been doing all three for as long as I can remember. I have spent most of my time since graduating university traveling and working remotely in Africa and Europe. My passion lies in conveying the right messaging to the right people, and being a part of the CountingWorks and TaxBuzz team means I get to do that not only for our company, but for clients across the country as well.

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