Why some taxpayers may not want to wait to register

The IRS recently extended the deadline for filing individual tax returns to May 17 from April 15.

You may still want to file for the original date.

That’s because the extension only applies to individual taxpayer filings that fill out an IRS Form 1040. For people who make estimated tax payments, including freelancers or with certain small businesses, the first quarterly amount still expires on April 15.

In addition, the IRS has not yet given further guidance on whether other deadlines will also be extended. This includes contributions to individual retirement accounts and health savings accounts.

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And while accountants and autofilers may be feeling less stressed now that the deadline has been extended, the complicated year and mid-season changes in tax rules mean that starting early is probably a good idea to avoid facing a fine. or leave money on the table.

“Just because the deadline has been extended does not mean waiting until May 15 to organize everything,” said Anjali Jariwala, certified financial planner, certified public accountant and founder of Fit Advisors in Torrance, California.

Contribute to an IRA or HSA

Currently, April 15 is still the last day to contribute an IRA or and HSA for 2020. The IRS did not say that it will postpone the date to align with the tax filing deadline.

The deadline to contribute to these accounts is especially important for people whose adjusted gross income for 2020 may be close to the limits of the latest stimulus checks. If you have made a little more than the limit for a full check or may not be able to because you are in the elimination window, making a retroactive contribution to an IRA or HSA will reduce your adjusted gross income for 2020 and may make you eligible for a payment .

Whole checks for $ 1,400 are being sent to individuals with up to $ 75,000 in 2020 adjusted gross income, heads of households with up to $ 112,500 and couples filing together with up to $ 150,000.

For those who did more in 2020, the elimination is faster. The maximum limit for any payment is $ 80,000 for individuals, $ 120,000 for breadwinners and $ 160,000 for couples.

Contributors under 50 can contribute $ 6,000 to an IRA for 2020, and those over 50 can contribute $ 7,000. Individuals with autonomous coverage from a high-deductible health plan can save up to $ 3,550 in 2020. Families can save up to $ 7,100 and those aged 55 and over can contribute an extra $ 1,000 during the year.

Even if the deadline for these contributions is postponed, it is worthwhile for taxpayers to investigate how to make those contributions now.

“They should review this sooner or later, because the IRA’s contribution deadline doesn’t include extensions, so it’s either going to be April 15th or May 17th, but not beyond that,” said Luis Rosa, a CFP and enrolled agent and founder of Build a Better Financial Future in Henderson, Nevada.

Timing a stimulus check

For many Americans, tax refunds are one of the biggest benefits of the year. Those who wish to obtain theirs as soon as possible must submit the application sooner or later, so that the IRS can process your return and send the money.

In addition, families and individuals hard hit by the coronavirus pandemic may not want to wait to enter the process. Registering 2020 taxes is the only way to claim stimulus payments that you were eligible to receive based on last year’s income.

“If your income declined in 2020 from 2019 levels or if you had a child, it would probably be in your best interest to file your taxes sooner or later,” said Mandi Woodruff, Ally’s chief consumer advocate. “Stimulus payments are typically based on your adjusted gross income from your most recent return, and you can take advantage of new tax benefits this year, such as the recent expansion of the child tax credit.”

And while the IRS has postponed the deadline for filing federal tax returns, many state deadlines for local taxes have not been extended. It may make sense for some Americans to submit both returns at the same time, before the IRS due date.

Extra time can mean extra help

To be sure, the IRS can still extend other deadlines to coincide with the new filing date, as it did last year. And, there are some cases where waiting to register can help some to qualify for the last round of stimulus checks.

If you received stimulus checks in 2019, but made more money in 2020, making you ineligible, wait to receive your payment before placing your order. The IRS will use the 2019 revenue they have and will not withdraw the payment when it realizes that you will not qualify in 2020.

Those who had unemployment income in 2020 may also want to wait, mainly to make the state return, according to Rosa.

“It is worth waiting to see if their state will also follow the IRS directive not to tax the first $ 10,200 of unemployment benefits,” he said, adding that this would also reduce any taxes owed or increase reimbursement.

If you want to use the extra time to your advantage, you can turn in your statement to a taxpayer and make sure you are not leaving money on the table, according to Adam Markowitz, an agent enrolled at the Howard L. Markowitz PA CPA in Leesburg, Florida .

The IRS received more than 66 million returns as of March 12, according to the agency. Of the more than 63 million that were filed electronically, more than 34 million, or about 54%, were prepared on their own.

“This is a scary number for me,” said Markowitz. “There are literally probably hundreds of millions, if not billions of dollars of money that people just have no idea they can go and get.”

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