You may know by now the federal tax deadline was extended to May 17, 2021 (from April 15) and the majority of states have also extended their tax deadlines as well. So if you completely forgot about doing taxes and you're freaking out you're 4 days late.... well luck is on your side! Here are some core reminders as you prepare to file:
The deadline for IRA & HSA contributions for 2020 actually bleeds into the beginning of this year. So you have until May 17, 2021 to contribute to your IRA or HSA for the 2020 tax year.
If you over-contributed to any of your tax-advantage accounts (remember the federal limits!), don’t worry… you can still fix that by contacting your bank to make the necessary adjustments and avoid any penalties.
If you have any capital losses from previous years, make sure to carry that over, or apply that to any gains you might have had from selling stocks/bonds this past year. Remember, you should not be taxed on capital gains in your tax advantaged accounts (e.g. IRA, 401k, 529, HSA).
Charitable donations of up to $300 made by Dec 31, 2020 are deductible (above and beyond your standard deduction). So your donations to any 501(c)(3) charities are deductible. This is a unique benefit this year due to the CARES ACT, so don’t forget to take advantage.
If you received unemployment last year, these benefits are taxable (in most states). Make sure you account for this and are prepared for this.
There are a bunch of tax credits to look out for this season, including the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), Saver’s Credit, and Recovery Rebate Credit. This last one specifically pertains to those that are owed a stimulus check but didn’t get one.
For those of you that have not started your taxes, you can use any of the following tax software:
H&R Block (easy, not free)
TurboTax (easy, usually not free)
Credit Karma (slightly harder, free)
Free Fillable Forms (so much harder, free)
By Hand & Mail (WTF, who does that?!)
Others programs (I have not used so I won't say too much): TaxSlayer, Tax Act
Yay for Tax Season!!!! (said no one ever). While doing taxes is a huge pain in the ass, I try to look at this time in a positive light. I get up, close, and personal with my finances and activities from last year, and it helps me plan for the following year as well. With that said, if any of you have ever questioned why doing taxes is so damn hard...
it’s because the US tax system and the players involved are insanely corrupt. If you’re looking for a good download on our entire messed up system, I recommend this episode from the Patriot Act!
Boost your Wallet. Wellbeing. World.
Rebecca
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