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Should you take that extra month to file your taxes?

Taxes IRS AP
Posted at 12:20 PM, Apr 06, 2021
and last updated 2021-04-06 14:20:24-04

The pandemic has changed many aspects of life, including taxes, and is again leaving Americans with a little extra time to file their returns.

But the extension granted by the Internal Revenue Service doesn't mean it makes sense for everyone to procrastinate until this year's new May 17 deadline.

Asked whether it's prudent to stick with the usual April 15 deadline, accountant Dan Geltrude said the decision basically comes down to whether you're expecting cash back from Uncle Sam.

If you anticipate a refund, "you want to file your tax return as soon as possible," Geltrude told CBSN. "Keep in mind that the IRS processes those refunds on a first-in, first-out basis, so you want to get in on a timely basis."

Filing your return electronically and requesting an electronic payment directly into your bank account will also "accelerate getting your refund as opposed to filing a paper return," he advised.

As to whether or not it makes sense to hold back on filing tax returns to potentially qualify for more stimulus that now has many Americans getting $1,400 checks — well, that also depends, according to Geltrude.

"If you have made the same amount or less than what you had made in the past, file on time," he advised. "If you've made more, you may not qualify for that stimulus check and therefore you may want to wait until the May 17 deadline to file your tax return."

Noting that individual filers can delay federal tax payments until May 17, Geltrude cautions to make sure to file on time with that date. Taxpayers who file after May 17 will be subject to penalties and interest. "And there's no sense in paying the IRS anything more than you have to," the CPA said.

Also keep in mind that stimulus and unemployment payments, as well as the prior administration in Washington, D.C., have changed the tax landscape, Geltrude said.

"The one thing you want to take a look at this year, that's a little bit different than the past, is if you are married you want to have your tax preparer take a hard look at whether you should file 'Married Filing Jointly' or 'Married Filing Separately'," he said.

That largely has to do with unemployment aid, up to $10,200 of which is not going to be taxable this filing season. "The earning cap is the same as if you're single or married, so that's why you want to look at how you file to maximize how much you potentially get back from the IRS," Geltrude explained.

"Many tax deductions went away with the [2017] Trump tax plan, so a lot of things are no longer there." he said. "However, you still want to do things like maximize what you contribute into your retirement plan, whether it's a 401(k) or an IRA, because that is a great way to save for the future and you still get the tax benefit."

The IRS deadline extension gives filers an extra month's grace period to contribute the maximum amount of cash into their IRAs for the 2020 tax year, for instance — one less excuse to not take advantage of one of the biggest tax breaks available for retirement savers.

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