2020 introduced a number of unprecedented situations that have required some massive adjustments. And now, with the tax filing season upon us, a raft of brand new challenges await ahead of the April 15 deadline.
Chief among them: uncertainty around the economic stimulus given to American taxpayers as part of the Coronavirus Aid, Relief and Economic Security, or CARES Act.
Last spring, in the throes of the first round of stay-at-home orders across the country, American taxpayers received up to $1,200 per person, with an additional $500 per qualifying child, of economic stimulus. How much was determined by the number of people in a respective household, and the taxpayer’s or household’s adjusted gross income for 2019 or 2018.
Sounds straightforward so far, right? Well, in a recent virtual seminar I conducted, it seemed that, as many professionals have begun to get their ducks in a row to help their clients in 2021, they’re not finding it to be so simple.
Craig Kurtzweil is the chief data & analytics officer for UnitedHealthcare's commercial business. In this role, he leverages the nation's largest health care data set to identify and share insights that can help people and care providers make more informed health care decisions, make health care more affordable for everyone and improve outcomes. This includes exploring new ways to apply data through machine learning and artificial intelligence, creating the next generation of health care analytics and making data a differentiator in the marketplace for the company.
Craig joined UnitedHealthcare in 2005. Since then, he has focused on enhancing how data and analytics support UnitedHealthcare's largest employer customers. His team works with large and complex clients that require a broad view of data, ranging from cost and utilization to productivity and disability exposure. As part of this work, Craig formed the Center for Advanced Analytics to focus on analytic innovations that change the way we evaluate health care value.
Prior to joining UnitedHealthcare, Craig served as an actuarial consultant at Deloitte.
Trinity Davis, managing director at 360 Privacy, spent 18 years in protective services, focused in the UHNW private family office and tech sector.
He built and led cross-functional teams in executive protection, residential security, travel security management and protective intelligence, spending the last six years in Silicon Valley working in social media and fintech. He moved to 360 Privacy in 2022 to focus on educating the industry on digital executive protection and how physical threats begin in the digital landscape.
Brandon Milhorn has nearly three decades of advocacy, policy, legal and regulatory experience, primarily in and around Washington, D.C., including five years in critical senior leadership roles with the Federal Deposit Insurance Corp., seven years in the private sector with Raytheon and over a decade of public service as staff director and chief counsel for the Senate Committee on Homeland Security and Governmental Affairs, general counsel for the Senate Select Committee on Intelligence, as an attorney at the CIA and in two federal court clerkships.
Chief among the questions I received was whether a tax professional needs to know how much stimulus a taxpayer received. The answer to that question is “Yes,” and somewhat surprisingly, that creates a potential complication.
Why? Well, for starters, many taxpayers have undergone a series of life-changing events: everything from migrating to virtual work to setting up their kids for remote schooling. As a result, these spring payments seem like they were doled out about 10 years ago. There are a large number of taxpayers who simply don’t remember how big of a check they received from the government.
Of course, along with those checks came documentation that taxpayers may have filed away. But that letter was discarded by many. Why? Some simply did so in haste, while others might not have thought it would be relevant to their 2020 return.
Whatever the reason for a missing paper trail, taxpayers who used direct deposit should be able to track down this exact sum on their bank statement. But for those who were issued checks or prepaid cards, it might cause a hiccup in the process, and in some cases, delay return preparation this spring.
Individuals have their questions, too. After consulting with tax pros, I’ve been told that many taxpayers are unsure if the stimulus was a loan that needed to be paid back. The stimulus, of course, was not a loan and doesn’t need to be paid back to the government, unlike business owners who took out loans as part of the Paycheck Protection Program that haven’t been (or won’t be) forgiven. But the fact that more than one tax professional said they had clients ask could be a harbinger for a season where filers are coming in with a lot more uncertainty than usual.
Now, as a second round of stimulus is starting to hit taxpayers’ bank accounts, it would behoove tax pros and payers alike to be diligent about documenting these payments. Forward-thinking tax professionals can get ahead of a new round of uncertainty by making sure their clients keep thorough records of anything, and that’s important. Because from all early indications, it seems like filing season is going to be filled with headaches: a cherry on top of the 2020 sundae.
