2021 Tax Deadlines And End-of-Year Planning

Staying on top of the year’s important tax deadlines can be difficult, but timely filing can save you a fortune in penalties, interest, and stress. Also, due to the Coronavirus pandemic, many traditional filing deadlines have been extended by the IRS to give taxpayers more time to complete their returns. As a result the 2021 tax deadlines in the fourth quarter look a little different than in prior years.

Let’s review the most essential year-end filing deadlines, and explore some tax planning tips that could save you money when you file.

Important Year-End Deadlines

Each year, the IRS issues critical filing dates for individuals, sole proprietors, and corporations. Here are the fourth quarter filing dates you should keep in mind:

September 10, 2021

  • Workers who earned more than $20 in tip income during August must report this income to their employers by September 10th.

September 15, 2021

  • Quarterly Estimated Tax Payments for the 3nd quarter of the 2021 tax year are due September 15.
  • Partnership Returns (IRS Form 1065) are due September 15 (extended from March 15 due to the COVID-19 pandemic).
  • S-Corporation Returns (IRS Form 1120-S)are due September 15 (extended from March 15 due to the pandemic).

October 12,2021

  • Workers who earned more than $20 in tip income during September must report this income to their employers by October 12th.

October 15, 2021

  • Individual Tax Returns (IRS Form 1040) for those 1040 filers that filed for an extension earlier this year, October 15th is the final date for filing your 2020 tax return. There are no additional extensions.
  • C-Corporation Returns (IRS Form 1120) are due October 15 (deadline extended due to the pandemic). C-corp returns are typically due on the 15th day of the 4th month following the end of the corporation’s fiscal year.

November 12, 2021

  • Workers who earned more than $20 in tip income during October must report this income to their employers by November 12th.

What Happens if You Miss a Tax Payment?

The IRS charges a penalty plus interest for all late or missed payments.The late filing penalty for a 1040 return is 5% of the tax due per month as of 2020, up to a cap of 25% overall, with additional fees accruing after 60 days. If you do miss a payment, you are encouraged to get caught up as soon as possible to avoid a logjam of penalties and accruing interest.

Tax Planning Now to Save Money Tomorrow

On April 28 of this year, the Biden Administration unveiled its American Families Plan, which included a proposed increase in the capital gains rate for households earning over $1 million annually to 39.6%. Moreover, the Senate has passed a $1 trillion bipartisan infrastructure bill, H.R. 3684, the INVEST in America Act. There will be significant changes to the tax code.

Some common end of year tax planning strategies to review:

  • Stock loss harvesting. Tax-loss harvesting is a strategy that can help taxpayers minimize any taxes they may owe on capital gains or their regular income. It can also improve overall investment returns. As a strategy, tax loss harvesting involves selling an investment that has a lost value, replacing it with a reasonably similar investment, and then using the investment sold to offset any realized gains.
  • Spread your earnings out. Another option is to avoid the threshold of $1 million in annual income by deferring some income to future years. Spreading out your income can lower your annual figure below the $1M threshold.
  • Make the maximum IRA contribution now. Tax-advantaged retirement accounts (such as a traditional IRA or 401(k) plan) compound over time and are funded with pre-tax dollars, which makes them a great investment in your future. They’re also helpful at tax time, since any contributions you make to your plan will lower your taxable income.

Own A Business?

Business owners and real estate investors have additional opportunities to plan and reduce their tax burden. See our Tax Planning for Business post for more information.

Partnering with Moskowitz LLP

The most common mistake taxpayers make is trying to go it alone. Without expert guidance, you put yourself at risk for errors or omissions that could cost you penalties and interest later on. At Moskowitz LLP, we understand the challenges taxpayers face each year. That’s why we’ve helped thousands of individuals and businesses to assemble their records, prepare their returns, and negotiate if necessary with the IRS to ensure that our clients pay only the tax owed.

The experienced accountants at Moskowitz LLP can help you:

  • Get organized
  • File on-time
  • Avoid calculation errors
  • Avoid interest and penalties
  • Help you (and your business) stay compliant with all tax regulations

Why stress over your taxes? Contact Moskowitz LLP today!