4 tax moves to make this September
Wednesday, September 01, 2021
So how was your summer? Yep, it's over, or will be officially a bit later in this brand new month of September.
In addition to bringing some cooler temperatures (eventually, or so promise my local weathermen and women), the ninth month of the year also marks the opening of schools (at least in part, depending on COVID-19 Delta outbreaks), and football seasons (American, not Ted Lasso's version).
Tax tasks also are on this month's agenda.
Yeah, taxes aren't as fun as football (either U.S. or global leagues) or as welcome as a break from the heat or the kiddos going back to actual school buildings.
But taking care of some tax matters in September can provide you with some savings and help you avoid potential unpleasant tax surprises later in the year or next filing season.
Here are four tax moves to consider this September.
1. Evaluate your income: The COVID-19 pandemic has wreaked havoc on a lot of workers' financial lives. Some had their hours reduced. Others lost their jobs entirely. Still others were able to return to their jobs, get new ones, or start their own businesses.
Whichever situation is yours, it likely has changed your cash flow. And that also means tax effects.
If you're working for someone else, check out your withholding. How much in income tax have you paid Uncle Sam so far this year? How much is being taken out now each pay period? Is it enough or too much to cover your expected final 2021 tax liability?
While getting a refund usually is a good tax surprise, you might be able to put any overwithholding to better use by adjusting your withholding and getting the added cash each payday.
On the other side of the tax coin, nothing is worse than having to write the U.S. Treasury a big check at tax-filing time. So if you discover you're not having enough withheld, adjust it now to cover the shortfall. Doing so as early as possible in the tax year will mean the extra withholding is spread out over a longer time frame, reducing the added per paycheck tax bite.
Regardless of whether you need to take out more or less in income taxes each pay period, the IRS' online withholding estimator can help you determine the more accurate amount.
And if you're working for yourself, congrats on being the boss. Now make sure you're taking care of the associated tax responsibilities. That generally means covering the taxes on your self-employment earnings by making quarterly estimate tax payments.
2. Make your third 1040-ES payment: Speaking of estimated taxes, Sept. 15 is the due date (for most taxpayers; more on this in a minute) for the third payment of the 2021 tax year.
Estimated tax payments, either made electronically or by snail mailing a 1040-ES voucher, cover income that isn't subject to payroll withholding. In addition to self-employment amounts, that also covers income from investments and gambling or prize winnings.
The September payment covers money that came in sans payroll tax collection in June, July, and August. My earlier post has the scoop on the estimated taxes process, payment options, and the payment timetables.
3. Double check your tax deadlines: As I mentioned in the estimated tax section, not every taxpayer has to meet the impending Sept. 15 deadline. But the reason for getting to skip it isn't one any of us want.
Millions of folks every year get extensions of tax deadlines because they live or have businesses in areas that were hard hit by major natural disasters.
The most recent instance is Hurricane Ida. The IRS this week announced that all taxpayers in Louisiana, where the category 4 'cane made landfall last weekend, have until Jan. 3, 2022, to meet a variety of tax filing and payment due dates. Taxpayers in other states that endured Ida as she moved northeastward across the country likely will be given more time, too, if Federal Emergency Management Agency (FEMA) determines the damage was severe enough.
In addition to Louisiana, other previously announced tax filing delays, including the Sept. 15 estimated tax deadline, are available for taxpayers in:
- Tennessee, parts of which were struck by severe storms and flooding on Aug. 21, and who now also have until Jan. 3, 2022, to file various individual and business tax returns and make tax payments;
- California wildfire victims, who have until Nov. 15 to fulfill tax tasks that were due between July 14 and the new mid-November due date; and
- Michigan residents who endured severe storms, flooding, and tornadoes that began on June 25 have until Nov. 1 to meet applicable individual and business tax deadlines.
The IRS' offer of more time applies to more than this month's estimated tax payment. It also gives taxpayers in disaster areas who earlier this year filed for an extension to complete their 2020 returns.
Instead of having to meet that Oct. 15 deadline, they now can put off the final form submission until their new disaster-related due dates.
4. File your extended 2020 taxes: Those storm-struck filers, however, had to pay any 2020 tax year tax they expect to owe when they filed for the extension before the disasters hit. That's just a regular part of getting more time to file.
You know that if you, too, got an extension. And if don't live in a major disaster area — as so deemed by the White House and FEMA, not based on your personal point of view of current affairs where you live; I'm in Texas, so you see where I'm coming from… — you still must meet that Oct. 15 deadline to send in your 2020 tax return.
But you don't have to wait another six weeks to finish the job. The IRS will gladly take your returns as soon as you're through procrastinating. Like today. Or any day in September.
And if your adjusted gross income is $72,000 or less, you can still use the IRS' no-cost online Free File option. It's operational through Oct. 15.
More monthly moves: If the changing of seasons gives you some added tax energy, you can find additional September tax deadlines in the September Tax Moves list over in the ol' blog's right column.
That list, found just under the digital clock counting down to the aforementioned October extended filing deadline, has plenty of fall tax task ideas.
Everyone's tax situation is unique, so how many of these tax moves will apply to you will vary. But check them out just in case.
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