The deadline to file, or request an extension, for your 2021 tax return is 11:59 pm Monday. The government granted a 72-hour extension in observance of Emancipation Day on April 15, but the clock is about to run out.
“I would highly recommend that people if they are going to be late filing their taxes, to at least get that extension,” said Dana Overall, a Certified Public Accountant in Madison County.
Mr. Overall suggests that because while an extension is not an extension to pay any money owed, it will prevent you from incurring fees for failing to file on time.
As is usually the case from year to year, 2021 featured some changes to the tax laws, most notably as they pertain to children and child care. The Child Tax Credit was not only increased but offered, in part as a monthly payout as opposed to an annual credit. A family, for example, with a child under the age of 6 receives a $3,600 dollar credit for 2021. If that family did not opt-out of receiving those payments from last July through December, then you were given half of that credit ($1,800), over six months and can only take the remaining $1,800 as a tax credit.
“There were several clients who rely on that child tax credit for a larger refund in the spring, so some of those refunds weren’t as much as they were getting in the past,” Overall explained.
Mr. Overall said divorced couples who alternate years claiming a child would be in for the biggest surprise. Because those payments were based on 2020 tax returns but received in 2021, the parent who doesn’t claim the child in ’21 would still be on the hook for the tax liability.
“If someone received that child tax credit and they were not able to claim that child on their tax return this year, they had to repay that. There we some exceptions, but in most cases, they had to repay it on their tax returns,” he said.
Things like property taxes and vehicles taxes are still deductible, but only up to $10,000. Given the increase in the standard deduction, Mr. Overall said itemizing deductions may not have any added value for every person.
He also suggests that if you owe money from 2021, it’s best to begin paying towards that balance now if you’ve filed for an extension. The extension doesn’t now allow for payment deferrals. You’d still begin to accrue fees based on your total balance due.
“We can do an estimated calculation and at least have them pay some money in, now,” Overall said.
