FairTax supporters have long fantasized about April 15 becoming “just another day on the calendar,” rather than our dreaded annual Income Tax filing deadline. We got our gift in 2020, but it came in the wrong wrapper. This year's COVID-19 inspired Filing Day is coming on July 15, along with all the incumbent hassles and inconveniences of this national nightmare.
Americans can’t avoid facing up to our responsibilities, but opportunities do exist between now and then to help us help ourselves financially. We have listed a few for a quick reference so that our readers may see what applies to them.
- Required Minimum Distributions (RMDs) from retirement accounts were suspended for 2020, but some people took RMD distributions early in 2020, prior to the announcement of the suspension. Any RMD taken after January 31, 2020 may be repaid, in whole or in part, on or before July 15. This will render repaid funds non-taxable for 2020, lowering current tax obligations. Any income tax withheld from the RMDs will have to be repaid from personal funds, but the taxpayer’s refund in 2021 will include the amount withheld in 2020. The money is not lost, it is merely delayed.
- IRA Contributions for Last Year, normally due on or before April 15 of this year, can be made up to July 15, 2020, and the usual deductibility rules apply. There is still a chance to lower your 2019 taxable income and/or enhance your retirement savings.
- Quarterly Tax Deposits using Form 1040-ES will have until July 15 to make both the first and second installments, which would have been due on April 15 and June 15, respectively.
- Underpaid 2019 Tax Liabilities, normally due on April 15, may be paid on or before July 15, this year only.
- Self-employed Individuals and Small Business Owners can still open new SEP-IRAs and Individual 401(k) Plans before October 15, and 2019 contributions may be made up to the filing date. Filing can be delayed until October 15 by completing a timely Automatic Extension (Form 4868, available at irs.gov)
Van Wie Financial is a financial planning and asset management firm, and is not qualified to render tax advice and/or to prepare tax returns. We do include tax planning among our comprehensive planning services. Always check with your tax professional prior to executing any individual tax strategy. Once in a while, we encounter opportunities that arise from changes in the U.S. Tax Code, and our goal is to educate our listeners and readers as to what might be done, rather than to specify what they should do individually.
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