In addition to the unexpected health and economic surprises that 2020 brought, there were also many unique opportunities to make some unconventional changes to your tax situation for those who were paying attention. There were extraordinary amounts of unemployment payments issued, required minimum distributions waived, stimulus checks disbursed, and even the possibility of early penalty free distributions from 401k plans. At Total Wealth Planning, we were able to also proactively utilize the unprecedented market volatility to take advantage of strategies like tax loss harvesting and Roth conversions, saving clients huge amounts of tax dollars long term. Of course, with each of those changes, there is more reporting required for the IRS come tax time. So, for those who already have a tough time accumulating all of your tax info for your CPA or Turbotax, you may be feeling even more behind than normal this year!
Fortunately, to provide a little relief at the end of an already crazy tax year, the IRS has issued a memo pushing back the filing deadline for 2020 tax returns from April 15, 2021 to May 17, 2021, which includes postponing the payment deadline when penalties begin to be assessed.
While it’s always been an option to extend your return, taxpayers have historically been subject to penalties and interest on any unpaid tax liability starting after the normal tax filing date so this should provide some relief for folks who have found themselves a little behind this tax season. HERE is the link to the official release from the IRS.
Keep in mind that the extension only applies to Federal returns so you still need to act with haste if you haven’t completed your State return yet!