April 2024 Tax Update - Stay Ahead with Key Insights

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Inside This Article

Post-tax season is the perfect time for tax professionals to reflect on their practices and find ways to improve. Jason Dinesen and Nicholas Preusch share their insights in their recent video presentation, covering a wide range of topics from new legislation to practical tips for leveraging AI. This blog post distills their advice into actionable steps to help you stay ahead in the ever-evolving tax landscape.

Introduction

April's tax update brings valuable information for tax professionals. We'll cover post-tax season reflections, new tax forms, AI integration, ethical updates, and important court cases. This guide, tailored for U.S.-based tax professionals, aims to keep you informed and ready for the challenges and opportunities ahead.

Post-Tax Season Reflections

Improving Processes

Post-tax season is a crucial time to review and refine your procedures. Jason emphasizes the importance of identifying areas for improvement to make the next tax season smoother. Key areas to focus on include:

7202 Credits: Ensure you’ve checked for any missed opportunities related to the 7202 credit, which supports self-employed individuals who couldn't work due to COVID-19.
AI Integration: Nicholas highlights the benefits of using AI tools like ChatGPT to automate repetitive tasks and save time. AI can draft initial responses to client inquiries, allowing you to focus on more complex issues.
Ethical Updates: Stay updated with the latest ethical standards, such as the AICPA's new guidelines effective from January. This ensures compliance and upholds the highest standards in your practice.
Client Disengagements: Consider disengaging from consistently problematic clients to improve overall efficiency and client satisfaction.

Virginia 2021 PTE Tax

If you have clients in Virginia, note that the state allows a 2021 PTE tax credit in 2023. This can provide significant tax relief and should be processed through Virginia’s online portal by mid-September.

Beneficial Ownership Information (BOI) Update

By the end of the year, businesses must comply with new BOI rules, requiring them to report their beneficial owners to FinCEN. This regulation aims to increase transparency and prevent illegal activities such as money laundering.

Draft Form 1066-DA Released

The IRS has released a draft of Form 1066-DA, which will be required for reporting digital assets starting in 2025. Ensure your clients are aware of this upcoming requirement and begin collecting the necessary information now to avoid future complications.

Earned Income Credit (EIC) and Form 8867

The Government Accountability Office estimates that 34% of EIC claims were improper in 2023, costing $21.9 billion. It’s crucial to perform due diligence when preparing these claims to avoid penalties. Here’s what you need to know:

Form 8867 Requirements

Due Diligence: Ensure you interview the taxpayer, document their answers, and keep relevant documents for three years. This includes the 8867 form, worksheets, copies of taxpayer documents, and a record of how you obtained the information.
Penalties: The penalty for failing to meet due diligence requirements is now $600 per failure. For example, a return with EIC, child tax credit, additional child tax credit, and head of household filing status could result in a $2400 penalty.

Key Takeaways

Post-Tax Season Review: Identify areas for improvement and streamline your processes.
Virginia PTE Tax: Ensure clients benefit from the 2021 PTE tax credit by mid-September.
BOI Compliance: Prepare for new beneficial ownership reporting requirements.
Form 1066-DA: Start collecting digital asset information for 2025 reporting.
Form 8867 Compliance: Perform due diligence to avoid penalties and ensure accurate EIC claims.

Conclusion

Post-tax season is a time for reflection and improvement. By staying informed about the latest updates and leveraging new tools, you can enhance your practice and better serve your clients. For more detailed insights, explore the full range of MY-CPE programs and stay ahead of the curve.

FAQs

What is the 7202 credit?

The 7202 credit compensates self-employed individuals who couldn’t work due to COVID-19. It’s important to review your clients' eligibility for this credit.

How can AI be used in tax practices?
AI tools like ChatGPT can automate repetitive tasks, such as drafting initial responses to client inquiries, saving you time for more complex issues.

What are the new ethical standards effective from January?
The AICPA has updated its ethical guidelines, effective from January. Staying informed about these updates ensures compliance and upholds the highest standards in your practice.

What is the BOI rule?
The BOI rule requires businesses to report their beneficial owners to FinCEN by the end of the year. This regulation aims to increase transparency and prevent illegal activities.

What is Form 1066-DA?
Form 1066-DA is required for reporting digital assets starting in 2025. Ensure your clients are aware of this upcoming requirement and begin collecting the necessary information now.

For more updates and detailed guidance, continue exploring MY-CPE’s resources and stay informed about the latest developments in the tax world.

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Drew Steven

Financial Service Professional, Pension and Retirement Specialist

Over 38 years of Financial and Sales/Marketing expertise with investments, insurance, annuities, financial planning, analysis, and educating struggling clients to eliminate debt, increase liquidity, and maximize savings for retirement planning