Delayed (Tax) Gratification

May 13, 2021 By Glen Buco, CFP®
Glen J. Buco, CFP® President West Financial Services

In March the Internal Revenue Service announced that the 2020 tax year due date for individual’s federal income tax filing would be extended from April 15, 2021, to May 17, 2021. With the extension, you have an opportunity to avoid a few headaches resulting from a very difficult year and still have a few tax planning opportunities to reduce your 2020 taxes.

Keep in mind that during the pandemic the IRS had to close facilities, deal with extensive legislation changes and work through new responsibilities, such as stimulus checks and additional unemployment benefits. In testimony before the Senate Finance Committee, Commissioner Rettig indicated that by the end of 2020, there were 11.7 million paper-filed tax returns still outstanding and, at one point, over 20 million pieces of unopened mail.

In conversation with preparers, it appears that many 2019 returns are delayed and still to be processed. We are hearing about issues with uncashed checks, lost returns, receipt of refunds which were to be applied to the 2020 return, refunds not yet processed, and non-receipt of stimulus checks — a wide range of issues.

Things to do now:

  1. Check on the filing of your 2019 return through IRS.gov and Where’s My Refund? The tracker displays return received, refund approved and refund sent.
  2. Consider making IRA and Roth contributions for 2020 prior to filing your return.
  3. Calculate SEP or single person 401(k) contributions.
  4. File for an extension, if you have not collected or reviewed your return information.
  5. E-File your return using IRS Free File or Fillable Forms, a free tax return preparation site, with commercial software or an authorized e-file provider.
  6. Start planning now for 2021.

Meet Glen Buco, CFP® »

Read the Financial Planning Focus May 2021: 

 

IRS.Gov. Written Testimony of Charles P. Rettig, Commissioner, Internal Revenue Service, Before the Senate Finance Committee on the Filing Season and COVID-19 Recovery. 
https://www.irs.gov/newsroom/written-testimony-of-charles-p-rettig-commissioner-internal-revenue-service-before-the-senate-finance-committee-on-the-filing-season-and-covid-19-recovery

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Categories Financial Planning Focus