There have been enough dates thrown around lately that I thought it would be worth it this week to look at timing when it comes to taxes.
As most are probably aware, the IRS has pushed the federal tax filing deadline back one month to May 17. I know for many this feels like some sort of reprieve because you get more time to do a task you don’t want to do, but it doesn’t really offer anything more than time. In fact, I would only counsel people to still get their taxes done as soon as possible, act as if April 15 is still the deadline, and then you can start looking toward next year when there will again be more new tax rules to navigate. Leaving my quick preaching aside, there are actually times when April 15th is still critical in reality. For instance, if you are someone who makes estimated quarterly tax payments, the first of those will still be due on April 15th as that date did not get pushed back with the filing deadline. (You can read a little more about there here). It is also worth keeping in mind that the IRS deadline only affects your federal taxes. Your state deadline may still be different. Most states have offered some sort of delay, as well, but it is worth checking on that and making sure before you make a mistake that means your state return is late. You can do that by clicking here. You should keep in mind that the tax filing delay was not only implemented by the IRS as a gift to the taxpayers. The latest stimulus package contained multiple changes that the agency had to implement, so the delay gives it some time to figure that all out. It also does not exactly help that at the same point the IRS received the responsibility of distributing individual stimulus payments, and this all just leads to a couple more issues with timing. First, I know many people are still eager for information about when they will receive that individual payment. There is no magic information source about that. The best thing to do is to consult the IRS’s Get My Payment website - www.irs.gov/coronavirus/get-my-payment - and find where you stand. Second, the agency is even now still working through some returns from the 2019 tax year, displaying how difficult pandemic-ravaged 2020 was for it. That means some may need to be preparing themselves to have their tax refund take a little longer to receive than usual. Hmm, it’s almost like that is another reason to not delay filing your taxes. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter
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So just when we (barely) felt like we were getting a handle on all the legislation passed last year due to the COVID pandemic, the American Rescue Plan was passed earlier this month giving us a whole new batch of things to try to figure out.
There just might be some reason why the IRS pushed back the tax deadline by a month shortly following its passage after all. The easy and headline-grabbing parts of the package were known immediately and by this point many have already received their economic impact payments. After those $1,400 payments, the next biggest news seemed to be the child tax credit because, hey, many people were now going to be looking forward to getting even more checks directly from the government starting later in the year. (Although now the IRS is starting to caution the timing of that beginning could be tricky.) Beyond those two bits, I think most of the news I saw surrounding the package was partisan takes about whether it was a good idea on the whole. This is not to say that the debate is meaningless, but it does obscure just what else is included in the package. For instance, were you aware of the Restaurant Revitalization Fund that will makes grants available? Did you know that many people now qualify to have the first $10,200 they received in unemployment benefits in 2020 be nontaxable? So for those of you who may be interested in getting beyond the initial headlines and finding out more of what is involved to add up to the $1.9 trillion price tag, here is a fact sheet from the Treasury Department that gives you the basic rundown. Even if you are not currently interested in knowing more, however, I would recommend not keeping your eyes and ears closed to future news of what the bill contains. Just how all these pieces will play in practice really is not known yet. This is going to be an evolving topic and if the past year is any indication, it will only evolve in a way that adds more benefits to more people. Even if you currently feel secure, why not take some added benefits if they are offered? Trust us when we say that we understand how it can feel maddening when so many tax and financial rules keep changing. There truly have been many moments when we feel we have things figured out, then new guidance or laws say we were wrong. This is hopefully the end of the line when it comes to pandemic legislation, though, so keep your mind in the game a little longer and we will work together to figure out how to continue making it work to your best advantage. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter Believe it or not, there is now less a month to go until the tax deadline of April 15th (barring any change of the filing date, but we won’t get into that again.). This means that it is really time to get your paperwork together. We are now getting to the point where it can become difficult to acquire any missing forms before the deadline.
If you are missing a W-2 or 1099 form that reported income, you should contact your employer or issuer and obtain a copy. It is possible that your personal copy got lost somewhere along the way, which means that IRS knows you received the money and if you do not claim it on a return, they will notice. It is also possible that the information the form contains will result in you getting a refund and you do not want to overlook that, right? You should also contact your employer/issuer if the form you received is incorrect. Again, if you know the correct numbers and use those instead of the numbers that the IRS has, this is going to garner some interest that you do not want. There are cases where you will not be able to get a form you should have received, though. We cannot always account for the actions of others who did not do as they should. There is a form you can use at this point – Form 4852, Substitute for Form W-2, Wage and Tax Statement or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Yes, that is a long title, and yes, that speaks to how little fun this time of year can be, but it also tells you how good it is to get it handled with enough time to be able to handle all those potential tasks. This also seems like a good time to talk about what to do if you received forms saying you received income that you did not. This could be a tipoff to a scam that became more prevalent over the last year as unemployment benefits were claimed by schemers who used the names of others to get the extra benefit given by the government in the midst of the pandemic. You should not have to pay taxes on money you never received, and again, reporting and getting on top of that immediately will only lead to fewer issues and headaches. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter This is a time when many people in America are expecting to get some extra money into their bank account. Of course, this comes about every year at this time when tax refunds are hitting bank accounts. With the addition of an anticipated stimulus payment coming to a great number, though, the dynamic has expanded and can present a moment of opportunity.
Of course, there is a sizable number of people for who this is just a life preserver. For them, these financial infusions will allow them to finally catch up a little bit or put food on the table. And for anyone in that situation, that is exactly how that money should be used. I want to speak to others, though, the fortunate ones who can afford to think about what to do with this money. And I think the best way to handle it may to be think about what you would have done with the money if it came 18 months ago. Remember that time, when you used to sit at a bar or go to a basketball game? Yes, things have changed radically in the last year for everyone, and the way we approach money may certainly have changed with it. For some, this may mean they cannot see an extra $1,400 without thinking vacation because they have spent too much time in their house. For others, this may mean immediately wanting to put it into the bank because the last year eroded any sense of security. Just as our mindsets may have shifted radically from where they were a year ago, though, the upcoming year could be coming with a similar shift. There can be argument over whether or not (and how much) we will be wearing masks at that time, but all indications are that we will be in a much better place on the whole a year from now. And that place will be so different because it will be so much closer to normal – you know, that place we may have been in 18 months ago. So, if you are faced with choices about what to do with some of that new money, the best thing to do may be to use it as a bridge back to normal. I don’t necessarily think there are right or wrong answers as to how to use it, but the answers should be the right ones for every individual making it. To find that answer, I do believe it is worth spending some time asking our old selves what we would have done with it way back in 2019 before we make those 2021 decisions. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter We are getting into the thick of tax season and the IRS has a lot of work to do. Granted, that is just usually the case this time of year but things are looking different for the agency this year. Of course, that is largely due to 2020, which was what it was.
First, the IRS still is working through some tax returns filed last year while starting to get hit with the influx of recent ones. (You can read more about this here.) Second, the next stimulus package is making its way through Congress with the hope still being to have it passed by the middle of this month, leaving the agency looking at the upcoming task of getting out another round of individual payments. (Read more here.) Putting all this news together sounds worse than it seems. The rollout of previous individual payments in the two prior stimulus bills happened very smoothly on the whole. And as more people file their 2020 taxes, it only means that the IRS has the information needed to get them their money. Also, the returns lingering from last year are not normal, run-of-the-mil ones. Yes, the agency has been slow in areas due to staffing issues during the pandemic, but the things that can be handled quickly and digitally have still been being handled that way. Overall, if you are e-filing a tax return this season that does not have complications that will require extra agency attention, there currently seems to be no reason to believe that the processing of your return and the receipt of any refund will experience significant delays. All of these forces, though, are still raising the possibility of an extension to the tax deadline like was implemented last year. There have been requests from many areas to see this happen and there are obviously reasonable arguments being made as to why it is a good idea. For now, though, remember that it is only an idea. We are already in March, the deadline for filing your taxes remains at April 15, and that means more time has already passed in this year than remains until that mark. Consider this counsel then to not count on extra time that has not been granted. You still have time to be ready for April 15 and the sooner you start to plan making that happen, the more ease you can feel at knowing you’re already prepared. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter |
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