It’s another year and another Tax Day. Just when you thought it couldn’t get crazier, it did. Last year it was COVID, PPP, EIDL loans, and COVID sick pay. This year it’s a tax law changing right in the middle of tax season, affecting returns that had already filed.
I have had 23 tax seasons and not one is the same. Just when you think nothing can get crazier, it does. Last year it was COVID, PPP, EIDL loans and COVID sick pay, this year it was a tax law change that happened right in the middle of the season that affected returns that we already filed.
Can you give me some examples of those?
- Unemployment which became non-taxable income for certain individuals – as a reminder, those whose adjusted gross income is less than $150,000 can have $10,200 of their unemployment income not taxed.
- The payback for getting too much in Affordable Care Act subsidies was eliminated for 2020. So if your income was too high, you do not need to pay any of the subsidies back for last year. This was a 2020 change only.
- Waiting to see what states would do with PPP funds and how they were going to tax it. The IRS came out fairly early stating that the PPP would not be taxable, but the states were a little slower. This delayed a number of business returns.
Tax returns were extended to May 15th, right?
- Individual returns and taxes due for 2020 were extended.
- Many states were also extended, but not all. Good thing is that WI and MN did extend.
- But the 2021 first quarter tax estimate was not as of Tuesday morning.
Were there returns that were not extended?
- Trust returns
- Gift tax returns
- Corporation returns with December year-ends were not.
- These returns will need to be extended before the end of the day.
What else was extended past Tax Day?
- You can still make a 2020 contribution to your IRA until May 17th.
- You can still make a health savings contribution for 2020 until May 17th.
- Also, you can make a 529 plan contribution for 2020 until May 17th.
And I am sure that we are not done.
- My guess is no. Especially with the infrastructure bill that will be going through congress soon.
- Some of that bill may be retroactive back to January 1 of this year, but we will have to wait and see.
Please contact us for further information or ask about any of the upcoming tax deadlines.