Alyssa Hodges, CPA •
You may have recently heard the news that the IRS will not be accepting tax returns until mid-February. While that is true for Individual/Personal tax returns, this does not apply to businesses. This also does not mean you should delay sending your tax information to your tax preparer because we still need time to prepare your return. We also hope that by getting information in early we can avoid a bottleneck situation once the IRS does allow returns to be filed.
So when should you send in your information? It depends on a few factors including the type of return (business or individual?), the information you need to be “ready”, and/or the type of tax forms you are waiting on.
You may have recently heard the news that the IRS will not be accepting tax returns until mid-February. While that is true for Individual/Personal tax returns, this does not apply to businesses. This also does not mean you should delay sending your tax information to your tax preparer because we still need time to prepare your return. We also hope that by getting information in early we can avoid a bottleneck situation once the IRS does allow returns to be filed.
So when should you send in your information? It depends on a few factors including the type of return (business or individual?), the information you need to be “ready”, and/or the type of tax forms you are waiting on.
Business Taxes
Businesses typically have their tax information prepared much earlier than individuals. In addition, the IRS is already accepting business returns.
In many cases, business information flows onto an individual taxpayer’s tax return which is why the filing deadlines are usually earlier.
Assuming you’ve kept your financial records clean and up-to-date throughout the year, there may only be a few amounts you’ll need to adjust in order to close out your year-end books. Below is a list of common accounting actions you’ll need to take before providing your financial records to us:
So what does this mean in terms of having your information available? If you only need to worry about items #1 - 4, you could potentially have your information ready as soon as January 1st. If you need to adjust for payroll, you may need to wait a few weeks for the final payroll to be paid. Other accruals will depend on how soon you receive bills. If they come shortly after the end of the month, you’ll be ready sooner, if not, you should wait as long as needed to ensure that all income and expenses related to the current tax year is captured in your financial reports.
One caution: if you have any concerns about the 1099s you will receive, you may want to hold off having your tax return filed until you have received all 1099s. The due date for 1099s to be furnished with recipients is February 1, 2021. Accounting for time in the mail, you should have the last of your 1099s within the first or second week of February. However, you can still give your information to your accountant to prepare ahead of time and wait until you verify income reported on 1099s to file your tax return.
Didn’t clean up your files regularly throughout the year? The following blog posts have some suggested tips for cleaning things up. These are just suggestions and not a complete list so reach out to your accountant if you need further assistance:
Individual Taxes
In most cases, individuals should wait until they think they have all of their information together before giving it to their accountant.
If you send one document at a time as you receive it, it is more likely to be lost in the mail or overlooked. Typically, you should receive a tax organizer from your accountant and you can follow the organizer to see what you had in the previous year. However, there are some exceptions in which you may want to send your information in earlier.
If you receive key information late, such as a K-1 during the first week of April, you may be able to convince your accountant to finish your tax return before the filing deadline if you send in your other information earlier. However, if you wait until then to send in all of your information you are very likely to need an extension.
Still not sure when to send in your information? Give your accountant a call and they can help with any questions!
Businesses typically have their tax information prepared much earlier than individuals. In addition, the IRS is already accepting business returns.
In many cases, business information flows onto an individual taxpayer’s tax return which is why the filing deadlines are usually earlier.
Assuming you’ve kept your financial records clean and up-to-date throughout the year, there may only be a few amounts you’ll need to adjust in order to close out your year-end books. Below is a list of common accounting actions you’ll need to take before providing your financial records to us:
- Bank reconciliations: If your bank statements are available online, download your bank statements as soon as they are available. This should be shortly after the end of the year. Once you have your statements or transaction detail you can do the year-end reconciliations.
- Credit card reconciliations: Similar to bank statements, credit card statements should be available shortly after year-end, or you can print your balance detail from your account online and complete these reconciliations as soon as the year is over.
- Inventory adjustments: If your business has any inventory on-hand at year-end remember to adjust inventory to your year-end count.
- Fixed asset adjustments: If your business has any fixed assets (property and equipment) on the books at year-end, review that purchases and dispositions of fixed assets are properly recorded in your financial reports.
- Payroll accruals: If you are an accrual basis taxpayer you may need to adjust for wages in the last week or two of the year that won’t be paid until the following year
- Other accruals: Many accrual basis businesses keep their books open for a few weeks to make sure there aren’t any unanticipated bills that still need to be recorded.
So what does this mean in terms of having your information available? If you only need to worry about items #1 - 4, you could potentially have your information ready as soon as January 1st. If you need to adjust for payroll, you may need to wait a few weeks for the final payroll to be paid. Other accruals will depend on how soon you receive bills. If they come shortly after the end of the month, you’ll be ready sooner, if not, you should wait as long as needed to ensure that all income and expenses related to the current tax year is captured in your financial reports.
One caution: if you have any concerns about the 1099s you will receive, you may want to hold off having your tax return filed until you have received all 1099s. The due date for 1099s to be furnished with recipients is February 1, 2021. Accounting for time in the mail, you should have the last of your 1099s within the first or second week of February. However, you can still give your information to your accountant to prepare ahead of time and wait until you verify income reported on 1099s to file your tax return.
Didn’t clean up your files regularly throughout the year? The following blog posts have some suggested tips for cleaning things up. These are just suggestions and not a complete list so reach out to your accountant if you need further assistance:
Individual Taxes
In most cases, individuals should wait until they think they have all of their information together before giving it to their accountant.
If you send one document at a time as you receive it, it is more likely to be lost in the mail or overlooked. Typically, you should receive a tax organizer from your accountant and you can follow the organizer to see what you had in the previous year. However, there are some exceptions in which you may want to send your information in earlier.
- If you receive a K-1 for a business or a trust that your accountant also prepares, you can send your information in before you receive the K-1.
- If your tax return is extended every year due to receiving late or corrected brokerage statements or K-1s you should send the bulk of your information in earlier. If your tax preparer is able to prepare your extension in advance of April 15th you will likely have a more accurate extension since they are not in a rush.
- Most forms must be sent by January 31st (Feb 1 this year)
- W-2s
- SSA-1099
- 1099-R
- 1099-MISC or 1099-NEC
- 1099-INT
- 1099-DIV
- Various 1098 Tax Forms, including 1098 Mortgage Interest Statements, 1098-E Student Loan Interest Statement, and 1098-T Tuition Statement.
- Other forms must be sent by February 15th
- 1099-B
- 1099-S
- Brokerage statements
- If you receive a K-1 from a business that does not file an extension, you will receive it by March 15th, if extended it could be as late as September 15th
- If you receive a K-1 from a trust, the original due date is April 15th so you may need to extend your tax return if you don’t expect to receive it timely.
If you receive key information late, such as a K-1 during the first week of April, you may be able to convince your accountant to finish your tax return before the filing deadline if you send in your other information earlier. However, if you wait until then to send in all of your information you are very likely to need an extension.
Still not sure when to send in your information? Give your accountant a call and they can help with any questions!
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