It’s always been the busiest time of the year for most businesses and certified public accountants. It’s a deadline everybody wants to beat if they want to avoid paying fees for tardiness.
Only this time, with the world still struggling—or recovering—from the COVID-19 pandemic, a few things changed with how taxes are filed. There’s no denying that nobody really anticipated the pandemic’s lasting effects, much less how it changed how the world worked overnight.
Read on to know more about how the COVID-19 pandemic affected how taxpayers filed taxes.
How COVID-19 Drastically Changed Filing Taxes
When cities went on lockdown, and severe restrictions were implemented, the world was bound to experience halts in economic activity. Employers cut salaries in half to save companies from permanently closing down for those who didn’t lose their jobs.
With already so little money left to cover expenses, it was a burden to worry about filing taxes. This was a time where governments intervened and proposed tax breaks to give their constituents a financial breather.
A couple of ways that helped US citizens cope in 2020:
A stimulus check is simply a check that’s sent to a US taxpayer to give them a bit of spending money. When taxpayers spend that money, they’re stimulating the economy by giving retailers and manufacturers revenue.
This creates a domino effect that stimulates the entire economy once all these taxpayers spend the money they were given.
These checks were part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was signed into law in March 2020 in the hopes of cushioning the blow of financial losses in the United States.
Now, with the talks of having a third round of stimulus checks, taxpayers are prompted to file their 2020 taxes early in the hopes of maximizing the amount they’ll get when the checks come around.
Check amounts can reach up to $1,400 for individuals and $2,800 for married couples. Another $1,400 goes if these couples have dependents.
Delayed Tax Due Dates
Around the same time that the CARES Act was signed into law, the Internal Revenue Service (IRS) issued a notice to extend the filing and payment deadlines between April 1 and July 15, 2020.
Many factors played key roles in moving the deadline, with the most important being public accountants’ inability to perform their jobs the same way they did pre-pandemic. To them, there was not enough time with all the restrictions.
Now, with most of the world still affected by the pandemic, there’s another call for an extension. The American Institute of Certified Public Accountants are calling on an extension to allow taxpayers and tax advisers to meet their obligations.
This year, tax season started later than usual, giving everybody a tight schedule to work with. Moreover, filing taxes this time around would be the last chance to receive stimulus checks for those who weren’t able to receive them last year.
Relief Grants for Businesses
The ones who took the hardest blows were small and medium enterprises that already had a small margin of profit, to begin with. Non-profit and faith-based organizations were also severely affected by the pandemic, given the lack of funding for these organizations.
To help them cope, the Small Business Administration (SBA) offered the Paycheck Protection Program, which will give loans to sole proprietors and businesses with less than 20 employees only.
There are two different loans available for these businesses: First Draw PPP Loans and Second Draw PPP Loans. Those who have not yet received the former may still be able to take advantage of it, while those who have previously received a PPP loan may still be eligible for the latter.
Implications on Future Transactions
The pandemic is still making its rounds in the United States. With a new variant threatening to increase the number of cases again, the US economy must find ways to address fiscal problems efficiently.
As seen, the US government can implement measures and acts to help its citizens survive during crises like this current one. It has already started last year’s first-round of relief programs, but it has to develop efficient ones that can be maintained in the long run.
With the need for a stronger economy to make up for the tragic losses during 2020, we can definitely expect changes as to how and when taxpayers will file taxes, what relief programs will be available for different kinds of businesses, and how all of this will alleviate the financial losses of the economy.