Last tax season threw taxpayers more curveballs than ever before. We saw last-minute changes and received seemingly conflicting guidance to tax questions. The problems were compounded while waiting for the processing of mail due to COVID-19 delays. The IRS’s recent announcement that tax season begins much later this year, on February 12, isn’t providing a lot of hope for a smooth experience in 2021. Here are five tips and key dates to help you get through this filing season.
1. Organization is key.
Be sure to take advantage of online access, and log into your accounts to see if you have collected all your tax forms before signing your tax return. Many companies are sending electronic tax documents to you rather than sending them through the mail. It might make sense to make a list of documents you expect and track what’s received. If you fail to include a document, you may either have to amend later or risk seeing that dreaded piece of mail from the IRS. The IRS receives copies of your HSA distributions, sales of stock, 1099s, and other items that are issued in your name and social security number. They will automatically issue letters if information is missing from your return.
2. File and pay timely to reduce penalties.
If you owe money, the IRS may hit you with a failure to file and failure to pay penalty on any balance due for late returns. Remember that requesting an extension grants you additional time to file, it is not an extension of additional time to pay. This means you could still be subject to penalties for balances that were due by April 15 when you file October 15, even if you filed an extension. You always have the option to pay at any time online. Keep track of your payments and share the information with your tax professional.
3. File timely to preserve your refund.
Your refund eventually becomes the property of the U.S. Treasury if you do not file your return to claim it within three years. In addition, you have a three-year window to revise your filings if you identify an error. Take the time to be thorough when gathering your information, and to ensure that you claim all the deductions and credits that are available to you.
4. Know your refund options.
E-filing paired with direct deposit is the fastest way for your tax refund to be processed. Also, direct deposit allows you to split your refund into up to three financial accounts, including a bank or Individual Retirement Account (IRA). Savvy filers can invest in themselves and their future by automatically routing a tax refund directly into a particular saving strategy.
5. Be vigilant about keeping your information safe.
Protect yourself against unemployment, stimulus, or tax return information scams. You can now also voluntarily opt into obtaining an IP PIN, which makes it harder for scammers to file fictitious tax returns in your name and social security number.
Important tax dates to keep in mind:
- February 1: Deadline for businesses to give 1099’s to contract workers, file Form W-2s with the Social Security Administration for employees, and for financial institutions to mail out Form 1099-B.
- February 12: IRS begins accepting and processing tax returns and extensions.
- March 1: Businesses must mail Forms 1099 and 1096 to the IRS.
- March 15: Last day for partnership (F1065) and S corporation (F1120S) returns and extensions.
- March 31: Last day for businesses to e-file Forms 1099 and 1096 to the IRS.
- April 15: Last day to file individual (F1040) and corporate (F1120) returns, extensions for 2020, or file a claim for refund for 2017. The first 2021 individual estimated tax payment is due.
- June 15: Last day for taxpayers living outside the country to file their individual 2020 return or extension. Second 2021 estimated individual tax payment due.
- September 15: Third 2021 individual estimated tax payment due. Extended partnership and S corporation return deadline.
- October 15: Last day to file individual and C corporation returns that time filed a 6-month extension.
- January 15, 2022: Final 2021 individual estimated tax payment due.
If you have questions about your specific situation, don’t hesitate to reach out to your MarksNelson contact or give us a call at (816) 743-7700. We are here to help.