Don't Mess With Taxes

It's April. You know what that means. Major League Baseball is back!

Yep, the return of The Boys of Summer takes top billing this month since the Internal Revenue Service pushed the usual April 15 Tax Day to May 17.

I'll be spending this Opening Day doing what I do every year when the professional baseball season starts: watching games. All 30 MLB teams are in action today, so that's a lot of innings to occupy my time.

 Update: Today's meeting of my East Coast team, the Baltimore Orioles, at the Red Sox's Fenway Park is postponed until Friday due to inclement weather in Boston. 
The New York Mets vs. the Washington Nationals in D.C. also is postponed, but due to coronavirus concerns, not the MidAtlantic weather.

I do realize, though, that there are some folks who'll be working today. And some of them will be working on taxes.

So before the first pitch is thrown, here are five tax topics to think about this April.

1. Pay your estimated taxes: When the IRS announced it was giving taxpayers another month this year to file 2020 tax returns and pay any due tax, it didn't give estimated tax payers the same extension.

April 15 is still the due date for the first quarter 2021 estimated tax payment.

The IRS has held firm to this 1040-ES timetable, despite repeated pleas from filers, tax pros and members of Congress. In fact, on March 29 when it announced the May 17 deadline applied to other common tax situations (notably, contributing to IRAs for the prior tax year), the IRS reiterated the April 15 estimated tax deadline.

So if you have income from January through March that wasn't subject to withholding, make sure you meet the upcoming 4/15 due date.

2. Know your state's tax deadlines: Most taxpayers also pay state individual income taxes. And most states have followed the IRS lead in moving their Tax Day 2021 to May 17. Most, but not all.

Hawai'i is the only one to say no to May 17, so far. Arizona is still considering its Tax Day options. And even some of the state tax departments that have extended their filing deadlines have made other changes to fit their own state tax codes and circumstances.

So make sure you know what your state tax collector expects from you and exactly when.

3. Double check your 2020 unemployment benefits: Around 40 million people received unemployment last year because their hours were reduced or jobs eliminated due to the coronavirus pandemic. Many were surprised to learn that unemployment insurance (UI) benefits are taxable income. But they also got some tax relief on March 11 when the American Rescue Plan Act (ARPA) was enacted. That new law exempts up to $10,200 in unemployment from federal tax.

Find that Form 1099-G you got showing your unemployment insurance amounts. You'll need that total when you do file your 1040 so you subtract the exemption amount.

There also are a couple of other unemployment issues to note at filing time:

1. If your unemployment benefits last year were more than $10,200, you will owe tax on the excess amount. For example, you received $10,500 in unemployment. The $300 over the $10,200 tax-free amount is taxable income.
2. If your overall adjusted gross income is more than $150,000 regardless of your filing status, you can't take advantage of the $10,200 exempted amount. All of your unemployment benefits are taxable income.

And if you filed before the ARPA became law and paid tax on all your unemployment, don't worry about filing an amended return. The IRS will send you a refund for your overpayment. (Preview: More on this will be in a post tomorrow, Friday, April 2.)

4. Help others: As you might suspect from the millions who were and still are out of work, things are tough.

Bills are coming due. The latest coronavirus relief payment is not enough — or not arriving soon enough — to provide that much help.

People facing such financial hardships are relying on outside help to get by in the persistent pandemic. If you can, consider contribution to that assistance. Food banks or groups that help those facing eviction will gladly accept donations.

Your charitable gift also could provide a tax break, although you'll have to wait until the 2022 filing season to make use of it.

The Coronavirus Aid, Relief and Economic Security (CARES) Act passed last March created a new philanthropic tax incentive for the 2020 tax year. On the tax return you're working on now, you can claim up to $300, regardless of your filing status, you gave last year to an IRS-approved charity.

You don't have to itemize to get the tax break. In fact, it's only available to taxpayers who use the standard deduction. You take the new charitable claim directly on Form 1040, line 10b.

For 2021, the $300 is doubled for philanthropic married couples who file jointly. So next filing season, single taxpayers can claim $300 and married couples can claim $600 on their joint Form 1040.

5. Don't fall for scams: Finally, any month of the year, before or after Tax Day, stay alert for tax scams. This is the second pandemic-affected filing season, which unfortunately has led to the creation of myriad schemes that use COVID-19 as a hook. Two that have popped up recently are fake promises to help people obtain undeliverable coronavirus relief payments and a tax refund phishing attempt targeting college students.

More April tax moves: OK, I know. This is a lot of tax stuff to consider in a month that, at least for this year, you don't have to think so much about taxes.

But if you want more tax tasks to take care of this month, you'll find some over in the ol' blog's right column.

The April Tax Moves list starts under the digital clock counting down to the May 17 federal filing deadline. Check them out.

If you're a baseball fan like me, you can do that tomorrow. Today, it's almost time to play ball!

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