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.
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For more than 15 years, Pamela has worked in both the public and private sectors, supporting clients and solving complex problems. She currently serves as FranklinCovey's thought leader on inclusion and bias as well as a Global Client Partner responsible for supporting some of the organization’s most strategic accounts. Her solutions-oriented and client-centric approach have resulted in unique solutions that exceed client expectations and achieve results. Pamela works with clients to match the right solution to organizational strategic priorities and is particularly adept at designing tailored, competency-based programs to solve her client's most pressing needs.
Through this work, Pamela has designed programs that have impacted hundreds of thousands of participants, including FranklinCovey’s Unconscious Bias: Understanding Bias to Unleash Potential solution. Pamela has delivered this content and facilitated strategy discussions related to diversity, equity, and inclusion to thousands of leaders across the globe.
She is the co-author ofThe Leader’s Guide to Unconscious Bias: How to Reframe Bias, Cultivate Connection, and Create High-Performing Teams, which launches October 27, 2020 (Simon & Schuster).
Prior to her current role, Pamela served as an EEO & Diversity Analyst and Trainer, where she conceived and implemented proactive diversity programs to include human capital planning, training on unconscious bias and microaggressions, and statistical workforce analysis. For nearly a decade, she also served the non-profit community, executing advocacy, communications, special events, and fundraising strategies.
She is a highly sought-after consultant, speaker, and strategist. Pamela has addressed leaders across the world on unconscious bias, high potential leadership, and building an inclusive and effective culture to include the United Nations System, US federal government, and the Fortune 500. She’s been featured on TD.org, and the Living Corporate podcast in addition to her FranklinCovey thought leadership and writing. Pamela currently lives in South Florida with her husband and children, where they spend their free time exploring all manner of superheroes.
Lorna Sabbia is head of retirement and personal wealth solutions for Bank of America Merrill Lynch.
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.
