Most tax professionals don’t want to think about a third consecutive extended tax season. However, with Build Back Better on the horizon and lessons learned from last year’s surprises from the American Rescue Plan Act, the best tools that tax preparers have this year may be Forms 4868 and 7004.
The House-passed Build Back Better Act does not include all of the sweeping tax changes that many in the tax profession were expecting. Higher tax brackets, corporate tax rates, and capital gains rates? None are in the bill. But that doesn’t mean that any or all of those won’t find their way into a potential final bill.
As a result, options like SEP IRA funding or waiting on the election for accelerated depreciation may be in order for 2021.
There’s nothing wrong with making a payment with an extension and waiting. Tax pros would benefit from having the final text from Build Back Better in place if it does become law. They will also have an idea of how 2022 will be playing out for their clients to determine how they want to handle potential facets of 2021 tax returns that will affect future tax years.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Adam Markowitz, EA, is the vice president of Howard L. Markowitz PA CPA, an accounting firm specializing in small business and individual income tax matters. Following in his father’s footsteps as an accountant, Adam became an IRS-licensed enrolled agent in 2018 after starting in the family business of small business accounting in 2007.
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