Close Close

Financial Planning > Tax Planning

Ed Slott's Last-Minute Tax Tips

Your article was successfully shared with the contacts you provided.

What You Need to Know

  • Business corporation tax returns did not get extended due dates.
  • Not all states are going along with the federal stimulus law that exempts the first $10,200 of unemployment benefits from taxes.
  • Higher taxes on corporations and taxing ‘book’ income seem likely.

As tax time kicks into full gear, CPA Ed Slott of Ed Slott & Co. says advisors should heed these last-minute recommendations.

First, the May 17 tax filing deadline does not apply to first-quarter 2021 estimated tax payments — which are still due by April 15, Slott warns.

“Most times, these payments are based on the income from the prior year, and since 2020 was such a strange and inconsistent year as far as personal earnings, you might need to have that info available by April 15 even you won’t be filing taxes until May 17,” Slott told ThinkAdvisor Thursday via email.

Also, corporation income tax returns did not get extended due dates, and Form 1120 is still due by April 15,” the tax and retirement expert said.

He added that other business returns for pass-through entities — like partnerships, LLCs and S-corps — were due March 15.

“Although extensions can be filed, any corporations that owe tax for 2020 must have that paid by April 15, 2021,” he said.

Also, “make sure your state has also extended their due dates,” he added. “I believe at this point most have, but it’s good to check to be certain.”

For those who received unemployment benefits in 2020, with adjusted gross income under $150,000, the federal stimulus law exempts the first $10,200 from taxation, but not all states are going along, Slott said.

New York, for example, announced Wednesday that it “will not go along with the exclusion and will continue to tax unemployment benefits in full,” Slott said. “Make sure your tax return reflects this adjustment. Remember to claim any stimulus benefits on 2020 returns that were not received last year. This can happen if 2019 income was too high or maybe a child was born in 2020.”

Biden’s Tax Agenda

As to where Biden’s tax plans are headed, Slott opined that “it’s going to be tight with a 50-50 Senate, so I don’t see anything extreme passing.”

For instance, nothing will likely happen on “the wealth tax, but higher taxes on corporations and taxing ‘book’ income (profits reported to shareholders, often substantially less than what is reported on tax returns) seems likely,” he explained.

In fact, Slott continued, “when you look at book vs. tax return income for some of these companies, it looks like two totally different companies. One highly profitable and the other on a respirator, showing gigantic losses and qualifying for enormous tax credits and refunds, yet they are the same company.”

There seems to be support “for taxing corporate income that is shifted to other countries, but it’s unknown what tax shenanigans companies will come up with to keep avoiding taxes,” he said. “This is not a new challenge and so far, the companies and their tax advisors seem to always be a step ahead of the government on this, no matter what laws are passed.”

Also likely: increased taxes on high individual earners, both for income and FICA taxes, and possibly for capital gains as well, according to Slott.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.