Tax season 2022 is already here, as dealing with numerous challenges is a reality for any tax preparation firm. Some of these issues with taxes are relatively minor, while others are much more complex. The impact of the pandemic only further complicates many of these problems. Staying proactive by looking at ways to overcome these different challenges is key to making tax season 2022 as smooth as possible.
Here is an overview of the top challenges facing tax preparation firms:
Importance of Tax Preparation Software with Support
Using software to assist with tax preparation is a necessity for any firm. Tax prep software can expedite the entire process while saving your team a lot of hard work. Investing in professional tax preparation software is especially beneficial in today’s workplace, as many companies continue to struggle to find and retain talent. Tax preparation software makes everyone’s jobs easier while requiring fewer employees to perform basic tasks.
The Never-Ending Tax Season Due to Covid Relief
One of the biggest obstacles for a tax firm is staying up to date with the ever-evolving programs offering Covid-relief for individuals and businesses. These relief programs play a crucial role in providing additional financial support, but they can also complicate tax season. Getting all of the necessary documentation from your clients is vital in streamlining this process. Staying current with these complex tax rules involving Covid relief programs is also key for tax preparation firms.
Keeping Up with New Tax Law Changes
Another challenge facing those working in tax preparation is keeping up with the different tax law changes in 2022. For example, the monthly child tax credit payments in 2021 can either increase or decrease the tax refund for your clients. Individuals may also qualify to receive the Recovery Rebate Tax Credit if they haven’t received their third stimulus check. Tax law changes in 2022 also allow clients to deduct $300 worth of cash donations without itemizing these costs. Considering all of these scenarios and how it impacts each client is critical for a professional tax preparer.
Working with the IRS
Dealing with the IRS is often a major hassle for a professional tax preparer. The pandemic forced many of the employees at the IRS to work from home, which is much different compared to working inside of an office. Additionally, many of these employees left the IRS or took a leave of absence, which created even more backlogs and delays. These different issues will make it even more challenging for tax preparation firms to work with the IRS during tax season 2022.
Implementing Emerging Technology
The tax prep industry never stays the same, but it’s constantly evolving each year. Keeping up with these different trends is critical in meeting your clients’ needs. Data analytics and robotic process automation (RPA) technology will significantly impact tax preparation firms within the next few years. Learning how to use this state-of-the-art technology can help you separate your tax firm from the competition and give you a much-needed edge by providing your clients with additional insights.
Managing a Hybrid Work Environment
Many tax preparation firms let their employees work from home while periodically making trips to the office. Managing this hybrid work environment isn’t easy during tax season. Using cloud computing with professional tax preparation software is a great way to overcome many of these problems. Employees can work with each other in real-time from different locations. The ability to access these documents on the cloud saves a professional tax preparer a lot of time and dramatically reduces the amount of paperwork.
Preparing Your Workforce
Taking a proactive approach towards tax season is essential for any tax firm. One way to plan for this busy time of the year is to evaluate and prepare your team ahead of time. For example, you may consider adding a few temporary employees to handle such a large volume of work. Training these new employees ahead of time will make the learning process much quicker and less stressful for everyone. You may even want to consider upgrading or adding new technology to help you stay well-prepared for tax season 2022.
Tax preparation firms will continue to face numerous challenges throughout tax season 2022. Some of these issues are related to the pandemic and the lack of available workers. New tax laws for the 2022 filing season also create additional obstacles. Using professional tax preparation software can help firms overcome many of these issues while saving yourself a lot of time and energy. Investing in this technology will help you avoid costly mistakes, and it will also provide the best tax preparation services for each of your clients.