by Andrew Petty
This is the time of year when some are scrambling to finish their tax returns which are typically due in mid-April. That’s not the case in 2021. The IRS recently announced that it is pushing back the federal tax-filing deadline until May 17, 2021. This gives you an extra month to make sure you are prepared to do everything properly. Note that due to weather factors, those in Louisiana, Oklahoma and Texas have until June 15 to file their federal tax return. Be sure to check on whether your state tax-filing deadline has changed.
The extra time may take some pressure off, but you can now make good use of the time to identify all the ways you can better manage your personal finances as they relate to your taxes. Here are four tips to consider as you put your final numbers together.
Tip #1 – Claim a charitable donation deduction even if you don’t itemize
With the standard deduction doubled in recent years, fewer people benefit from itemizing deductions. That kept them from claiming a deduction for charitable contributions. On your 2020 federal tax return, even if you choose standardized deductions, you can claim a $300 deduction for cash contributions made to qualified charitable organizations. In 2020, the limit applies to both singles and married. For 2021, a similar provision allows the deduction of cash charitable contributions of $300 single/$600 married, filing jointly.
Tip #2 – Obtain a stimulus payment you may not have received
Some people who saw their income decline in 2020 might not have qualified for government stimulus payments that were based on 2019 income levels. If you may have qualified based on your 2020 income, you can claim a Recovery Rebate Credit on your 2020 tax return.
Tip #3 – Be prepared to claim unemployment benefits as income
For those with adjusted gross incomes below $150,000, a special provision for 2020 allows you to omit gross income of $10,200 in unemployment benefits you received in 2020. However, anything above that amount is included in income and taxed at applicable ordinary income tax rates.
Tip #4 – Extend your time if you need it
If even the May 17 filing deadline isn’t long enough, you can file for an extension by that date. Then your taxes won’t be due until October 15th. If you anticipate having to pay additional taxes when filing your return, you must make that payment by the May 17deadline to avoid a penalty. The deadline for making the first 2021 estimated tax payment remains April 15, 2021.
Always check with your tax professional and financial advisor if you have questions.
Andrew R. Petty, CRPC®, APMA®, CLTC®, is a Private Wealth Advisor with Nona Wealth Advisors, a private wealth advisory practice of Ameriprise Financial Services, Inc. He offers fee-based financial planning and asset management strategies and has been in practice for 19 years. To contact him, please call 407-249-4006, visit his website at https://www.ameripriseadvisors.com/team/nona-wealth-advisors or stopover at his office at 10917 Dylan Loren Circle, Suite A, Orlando, FL 32825
Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.
Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.
Ameriprise Financial Services, LLC. Member FINRA and SIPC.
© 2021 Ameriprise Financial, Inc. All rights reserved.