Tax Tip Tuesday: A Retrospective of Tax Tips

By Jeffrey R. Wolfe, Senior Vice President and Manager, Wealth Planning Strategies

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As we come to the end of an extended tax season, there’s still a little time left to complete your tax return if you haven’t already done so; there’s also time to review your tax situation.

As tax season started, we discussed that while most tax rules didn’t change, COVID caused tax season to start a little late. We discussed considerations for the best time to file and some specific questions you may want to cover with your tax professional as well.

We learned about the IRS Dirty Dozen where The Service again warned us of the most common tax scams. For higher income earners we covered how you will continue to face higher taxes due to the net investment income tax and the Medicare surtax on earned income. We also covered some tax deferral techniques for a portion of your investments, along with considerations of whether your social security is taxable.

For mutual fund investors in taxable accounts, we want you to not be surprised by mutual fund distributions. We also addressed some of the confusion caused when self-reporting IRA distributions like rollovers, qualified charitable distributions, non-deductible IRA contributions and other unique exceptions. Moreover, if you took distributions from retirement accounts for COVID reasons, you have special reporting requirements this year.

For those that have filed their tax return, there is an app to track your refund. On the other hand, if you’re still waiting to file, the extension allowed more time for IRA Contributions, and provided additional time for retirement plan contributions and some updates for SEP IRAs and other retirement plan reminders which we reiterated when the tax deadlines were extended.

While taking a breath of relief now that tax season is over is nice, it’s a best practice to take what you’ve learned from this tax season and start planning for the rest of 2021. To that end, next week we will wrap up our Tax Tip Tuesday series with ideas to consider going forward, along with a brief discussion of various tax proposals from the White House and Congress that may substantially modify the existing tax landscape.

 

Benjamin F. Edwards does not provide tax advice; therefore, it is also important to consult with your tax professional for additional guidance tailored to your specific situation.