The IRS recently announced the 2020 tax filing deadline extension to May 17, and many are taking advantage of the extension.
Filing taxes is going to be quite different due to 2020’s unusual circumstances. In the past year, many either shifted to working remotely, started a business, or began freelancing for the first time. Having extra time to ensure everything in the 2020 tax return is accurate to accommodate these changes will help maximize tax refund opportunities and reduce the likelihood of an audit.
Here are some of the best ways to leverage the extra time the IRS has graciously bestowed upon us…
IRA and HSA Contribution Extension
You can contribute to an IRA and/or HSA account for an extra month (until May 17) if these accounts haven’t been maxed out yet, which can lead to even greater tax savings.
Tax Refund Delays
The IRS is experiencing a backlog from processing stimulus checks and last year’s tax filings, which means there will be delays in receiving refunds for this year’s filing. Waiting to file until closer to the new filing date may increase the chances of getting a refund more quickly as the IRS gets caught up.
Stock Market Gains/Losses
2020 was a roller coaster for stocks, and investors should take a closer look at how they can maximize tax savings from any gains and/or losses achieved last year.
As always, these are my own opinions and suggestions, and they could change due to market or economic conditions or other factors. It’s best to engage tax and legal counsel before taking action, as this commentary is not intended to serve as tax or legal advice.
When it comes to tax planning related to your investments, there’s always a lot to think about. Your Bartlett wealth advisor can help you consider your tax situation alongside your other advisors to determine which strategies make the most sense for you.