Money-Smart Moves to Make Before the 2021 Tax Deadline
This year, Tax Day is Monday, April 18, 2022, for most of the United States. (Maine and Massachusetts residents have until April 19 to file federal returns since April 18 is Patriot’s Day in those two states.)
If you need additional time to file your 2021 taxes, please let us know as soon as possible. We can help you file an extension by April 18, which gives you until October 17 to file. However, you are still required to pay any tax you owe, or a good estimate, by the April 2022 tax deadline to avoid a late-payment penalty and interest. So, make sure to include that payment with your extension request.
To ensure you don’t miss out on any of your hard-earned money, we have compiled five key tax planning moves to make before Tax Day.
1. File your 2018 tax return (That’s right — 2018!)
To claim a refund, taxpayers must file returns within three years of the original tax deadline. That means you have until April 18, 2022, to submit your 2018 tax returns and claim any money you may have left on the table.
If you’re a new CJBS client and haven’t filed a tax return with us before, we’ll be sure to review your previous returns. In addition, If you have a cost-benefit for amending a prior return, we’ll advise you accordingly.
Last year alone, the IRS reported unclaimed income tax refunds worth more than $1.3 billion for taxpayers who didn’t file a 2017 Form 1040. So it’s well worth it to check and see if you have an opportunity to claim a refund and file or amend your taxes before the three-year deadline expires.
2. Contribute to, or open, an IRA by tax day
You may already have a Roth or traditional IRA if you’re saving for retirement. In either case, you have until April 18, 2022, tax deadline to contribute to your account for the 2021 tax year. Those same deadlines apply to anyone opening an IRA for the first time. Keep in mind the 2021 dollar limits as well as the maximum contribution amount for either type of IRA, which is $6,000, or $7,000 if you’re age 50 or older.
Understanding how to plan for your future is one of the best gifts you can give yourself. We can help determine whether making a traditional deductible IRA contribution or a tax-free growth Roth contribution or conversion is right for you.
3. Contribute to your Health Savings Account (HSA)
If you have a high-deductible health plan, you may also have an HSA, which provides a tax-saving way for you to pay for out-of-pocket costs. For the 2021 tax year, you have until April 18, 2022, tax deadline to contribute to your HSA. For 2021, the individual coverage contribution limit is $3,600, and the family coverage limit is $7,200. Note that if you’re 55 or older, you can put an extra $1,000 in your HSA.
4. Know when state income taxes are due
Finally, be aware of your individual state filing requirements. Most states follow the federal tax deadline. With many taxpayers working remotely, and with state tax rules varying from state to state, knowing your filing requirement and when your state taxes are due can help you plan accordingly — and avoid surprises.
At CJBS, we understand it can be time-consuming to keep track of the many opportunities you may have to save on your taxes and the related deadlines. Therefore, our talented team offers a variety of Business & Individual Tax Services to assist you with tax planning and tax preparation. As always, we’re here to help ensure a timely filing of your 2021 taxes and maximize your return.
Please feel free to contact us with any questions you may have.
Stay safe & healthy,
The CJBS Team