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Tax Day Considerations

Tax Day Considerations

Tax Day Considerations

Covid-19 created financial challenges for many. Find out how it may affect your April 15 tax deadline.

Tax Day for most is April 15. Typically, there are no exceptions, unless the date falls on a weekend or holiday, in which case the deadline is the next day that isn’t a Saturday, Sunday, or holiday.

However, 2020 was unlike any year in recent history. With COVID-19 impacting last year’s tax-filing deadline — it shifted from April 15, 2020, to July 15, 2020 — many taxpayers have been asking what impact, if any, the pandemic will have on this year’s filing.

As of this writing (February 2021), the IRS began accepting tax filings on February 12, 2021, and the tax deadline remains April 15, 2021

What About an Extension?
The IRS allows taxpayers to file for an extension to the April 15 deadline. To do so, they must complete and submit Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return form.
 
If the IRS approves the extension, it will provide you with a six-month grace period in which to file your taxes, or four months if you’re living outside of the U.S. Accordingly, if you live in the U.S., you will have until October 15, 2021, to pay any tax, interest, and penalties.


The IRS recommends filing for an extension as soon as you know that you’ll need one, as it will allow you time to fix and resubmit it prior to the April1 5 tax deadline if there are issues with your initial submission.

What About Estimated Taxes?
If you pay estimated taxes, your schedule varies somewhat. If you are self-employed, a farmer, or a fisherman, you must file estimated taxes quarterly with Form 1040-ES on or before:
 
ƒ Q1 payment: April 15
ƒ Q2 payment: June 15
ƒ Q3 payment: September 15
ƒ Q4 payment: January 15

If you earn tips, you will pay estimates monthly according to the following:
 
ƒ January 11
ƒ February 10
ƒ March 10
ƒ April 12
ƒ May 10
ƒ June 10
ƒ July 12
ƒ August 10
ƒ September 10
ƒ October 12
ƒ November 10
ƒ December 10
 
If you fail to pay estimated taxes by the above deadlines, you may incur a penalty. However, note that if you pay quarterly estimates and you fail to pay the Q4 estimate by January 15 BUT you file your 2020 income tax early — January 31 if you’re self-employed or March 1 if you’re a farmer or fisherman — you won’t be charged a penalty. 
 

Unemployed in 2020? Read On

If you were unemployed in 2020 and received unemployment benefits, you should receive a Form 1099-G from the IRS. The IRS considers this money taxable income, and you must report it on your federal tax return. Depending on where you live, your state may also count unemployment benefits as taxable income.

If you received unemployment compensation by the federal or a state government, you should include this with your other income when you file your taxes.

For information and advice on preparing your tax returns, we recommend consulting a tax or financial professional.

 

Thanks for checking out the blog. 

Joe Breslin, CFP®

 


This material is for general information only and is not intended to provide specific advice or recommendations for any
individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive
outcomes. Investing involves risks including possible loss of principal.
This material was prepared by LPL Financial.   Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and
broker-dealer (member FINRA/SIPC). 
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL Financial affiliate, please note LPL Financial makes no representation with respect to such entity.

 

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