TaxMama’s® TaxQuips To Extend or Not – and When?

 

 

It’s TaxQuips time from TaxMama.com® – today TaxMama® wants to talk to you about the upcoming April 15th deadline – sort of…

 

 

[Note: You can listen to the audio podcast here]

 

 

 

 

 

 

Dear Family,

Well, we are one week away from the traditional filing deadline of April 15th. Do we still care? After all, the IRS moved the filing deadline to May 17th – so can we totally ignore April 15th ?

Not really. Some things are still due on April 15th:

  • 2021 first quarter estimated tax payments
  • Your state tax return – if they haven’t complied with the IRS changed date
    https://www.getcanopy.com/blog/state-tax-deadlines-2021
  • Payroll tax (and sales tax) returns are still due on April 30th, in case you were wondering (sales taxes are state forms, not IRS).
  • Various other things that the IRS gave us additional time to handle – which are….

Which things ARE extended by the IRS?

  • Personal tax returns (Form 1040) and C corporation returns (Form 1120) and any other filings that were otherwise due on April 15th
  • IRAs, HSAs, etc. (Note: If the state didn’t comply with the extended filing deadline, you MUST fund these accounts by April 15th)
    • Individual retirement arrangements (IRAs)
    • Health savings accounts
    • Archer medical savings accounts
    • Coverdell education savings accounts

Even with the additional time until mid-May, here are three major issues that may convince you to just go ahead and put your tax return on extension anyway. Consider filing an extension, even if you have already filed your tax return. It will give you some special options.

1) Ensure that your state complies with the IRS’ Paycheck Protection Plan rules – and consider testing out some alternate computations.

2) The IRS has just released new guidance on the $10,200 non-deductible part of the unemployment benefits  and what to do if you have already filed your tax return and paid tax on this, now, non-taxable income. Some people won’t have to amend – the IRS will fix it automatically and issue a refund. Others, who have more complex issues (like our #3) may want to amend.
https://www.irs.gov/newsroom/irs-to-recalculate-taxes-on-unemployment-benefits-refunds-to-start-in-may

  • And there is a lot of discussion about filing married filing separately in order to reduce one (or both) spouse’s income below $150,000 to get this benefit. It will save some couples thousands of dollars – others will lose money. Test the numbers!

3) The American Rescue Act also waived your extra taxes if you got your health insurance through the Marketplace, but have to pay back the government-paid premiums when your income suddenly exceeded 400% of the poverty level (due to unemployment or IRA or retirement plan withdrawals)

  • We’re still waiting for specific procedures on how to eliminate that extra tax.
    • With this reduction in cost, what part of the health insurance expense is deductible as self-employed health insurance?
    • What are the mechanics (procedure) to get the tax/penalty waived because the adjusted gross income is too high?

So, now do you understand why you just might want to go ahead and get an extension anyway – and give yourself and your tax professional time to test different computations to see which ones get you the lowest taxes, legally?

There’s more you need to know, and your tax pros and I are rapidly learning everything we can to get you the most tax credits and refunds, legally possible.

For those folks planning to study for the EA Exam this year,  it’s going to be a really tough exam! Good news. THIS new law won’t be on the exam.
Join me our annual free webinar (a bribe is included for those who attend):
Everything You Wanted to Know About the 2021-2022 Enrolled Agent Exam.

Sign up for the last date.

April 19 – 10:05 am Pacific
http://iTaxMama.com/Everything_EA_April

Meanwhile, I will be posting various updates and webinars that I am teaching, on this Events page – https://irsexams.school/events-and-webinars/

And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

To make comments please drop into the TaxQuips Forum.

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