We normally have one day in our heads when it comes to taxes: The due date for federal income tax returns. In 2020, July 15 was deadline day for most taxpayers. This year, it was May 17. Next year, it's April 18 (April 19 for residents of Maine and Massachusetts). But these aren't the only deadlines during the year. In fact, there are several tax deadlines coming up on October 15 that you should be thinking about, too.
It's very important to know and understand all tax deadlines – including the October 15 due dates. If you were to overlook a deadline, it could cost you a lot of money through either penalties, interest, or additional taxes. So, let's go over 6 tax deadlines for October 15 that you don't want to miss. Check them out to see if something unexpected applies to you.
Extended Federal Tax Returns
If you didn't file your federal tax return by May 17, 2021, and requested an extension by that time, the extended due date is October 15, 2021. Bear in mind that if you requested an extension to file, that doesn't lengthen the time to pay whatever you owe in tax. You still had to estimate the amount of tax owe and pay that tax bill by May 17. Otherwise, you may be hit with penalties and interest on the unpaid amount.
Some people may have more time to file an extended federal tax return. For example, taxpayers living abroad or who served in a combat zone may be able to file an extended return later than October 15. Additionally, the IRS allows some people who are victims of a natural disaster to file an extended return after October 15. Check the IRS's disaster relief website (opens in new tab) to see if you're in an area where this type of disaster relief is allowed.
Extended State Tax Returns
For some people, a federal tax return is not the only return due on October 15, 2021. Assuming you don't live in a state that has no income tax, chances are good that you'll need to file a state income tax return by October 15 if you asked for and received an extension from your state (maybe a local tax bill too).
Many states have moved their state tax return deadlines to mirror federal tax return due dates. Therefore, since October 15 is the due date for extended federal tax returns, it's also the due date for many state tax returns that have been extended. However, to be sure, it's smart to check with the state tax agency (opens in new tab) where you live so that you know and understand the deadlines for things like extensions, estimated payments, and returns for other types of taxes.
Contribute to a SEP IRA
A Simplified Employee Pension IRA, or SEP IRA for short, is a favorite of self-employed people and small business owners who want to save money with a simple and inexpensive retirement plan. In fact, you can stash away more for retirement with a SEP IRA than with an employer-sponsored 401(k) plan. For 2021, you can contribute up to 25% of your pay or $58,000, whichever is less.
Therefore, if you were to use a SEP IRA, you can save more for retirement than if you used a traditional or Roth IRA. Remember that for 2021, the contribution limits for both a traditional and Roth IRA are $6,000 ($7,000 for those age 50 or older).
A SEP IRA must be set up by your tax return deadline (including extensions) for the year in which the qualifying contribution exists. The due date for contributing to the account is the same. Therefore, if you filed for an extension, the deadline for setting up and contributing to a SEP IRA for the 2020 tax year is October 15.
Contribute to a Solo 401(k)
For those self-employed people who want to put money away in a Solo 401(k) and requested an extension to file their 2020 federal income tax return, they have until October 15 to contribute to the account for the 2020 tax year. The maximum that a self-employed person can contribute to a Solo 401(k) for 2020 is $57,000. Anyone who is age 50 or older can contribute up to $63,500. (For 2021, these amounts go up to $58,000 and $64,500, respectively.)
Since you can make contributions to a Solo 401(k) both as an employee and an employer, these amounts may seem high, but remember that the limits for contributing to all 401(k) plans are based on aggregate totals. Therefore, if you contribute to a 401(k) plan through your place of work, that amount will count against the overall limit of $57,000 or $63,500 and, therefore, the amount that you can contribute to your Solo 401(k) plan will decrease.
Withdraw or Recharacterize Excess IRA Contributions
You contributed too much to your IRA and now have excess contributions! What do you do? As I discussed in a recent article, the best way to deal with this situation is to withdraw the excess amount before the due date of the tax return for the taxable year of the contribution (including any extension). That means you have until October 15 to withdraw excess funds contributed in 2020 if you requested a filing extension for your 2020 tax return. This allows you to avoid the 6% penalty if the withdrawal is done timely. If not done timely, the excess contribution plus any earnings on the excess amount will be subject to a 6% penalty for every year the excess remains in the IRA.
Another option is to recharacterize the excess amount by moving the excess contribution from a traditional IRA to a Roth IRA, or the other way around. By recharacterizing the contribution, you're moving it from one type of IRA to another in a nontaxable transaction. Doing this properly may also allow you to avoid the 6% penalty.
A recharacterization must be completed by the IRA owner's tax return deadline (including any extension) for the year in which the initial contribution was made. The deadline for recharacterizing a 2020 IRA contribution is October 15, 2021, if you extended the due date for your 2020 return.
Child Tax Credit Payments
While it's not a tax due date, there's something else happening on October 15 in the tax world that many Americans will want to know about. On October 15, the next round of child tax credit payments is scheduled to be paid. Additional child tax credit payments will be issued in November and December.
Remember that if you don't want these payments, tax law permits parents to opt-out of them altogether. To do this, use the IRS's online Child Tax Credit Update Portal (opens in new tab) to unenroll from the monthly payment program. You must unenroll at least three days before the first Thursday of the month in which the next payment is scheduled to arrive. Translation: If you wanted to opt-out of the October 15 payment or later payments, you had to opt-out by October 4. If you want to opt-out of the November 15 payment, the opt-out date is November 1.
If you're married and file a joint tax return, both spouses must opt-out if you want to completely shut down your monthly child tax credit payments. If either spouse refuses to opt-out, half of the payment will be received.
You can read up on all the changes for this year's credit at Child Tax Credit 2021: How Much Will I Get? When Will Monthly Payments Arrive? And Other FAQs.
William joined Kiplinger in July 2021. Prior to this, William worked in the tax world for over 15 years. He spent time working at the IRS, the U.S. Tax Court, and several private law firms where he dealt with both individual and corporate clients. He has a B.A. in Journalism from the University of Georgia, a J.D. from the Loyola University College of Law, and an LL.M. in Taxation from the Northwestern School of Law.
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