Time’s up!

For those of you taking advantage of the extended tax filing deadline, which moved from April 15 to July 15 of this year, the time to procrastinate is over. But filing your taxes is a much more pleasant experience when you are using this time to work toward your long-term financial goals. Here are some ways to get the most out of this year’s new tax deadline.

Understand the new tax laws

Even before the coronavirus, it had been a couple busy years in terms of tax legislation. Between the Tax Cuts and Jobs Act of 2017, state level tax reforms of 2018, the SECURE Act, the tax landscape changed for almost every filer.

Understanding the recent tax volatility is crucial to making the most of the tax filing season. It’s important to understand not only what the changes are, but their cumulative impact. There are opportunities in volatility, and working with your adviser and tax specialists will help you take advantage of them.

Take the opportunity to reduce your tax burden

With all of the recent market volatility, your portfolio might not be in the same place it was even at the original tax deadline. Fortunately, you still have some flexibility.

If you have not maxed out your IRA contribution for 2019, you have until July 15 to do so. If your investments have taken a hit, you might find you need to contribute more to meet your financial goals.

Depending on where the market is, you could be making IRA contributions at a discount relative to 2019, which presents an opportunity to rebalance your portfolio.

Also, remember that phase outs for CARES Act stimulus are based on your adjusted gross income. If you have already received a check, you are good to go. But if you are at or around one of the cutoff points (phase outs begin at $75,000 for single filers and $150,000 for couples filing jointly, with a complete phase out at $99,000 for single filers and $198,000 for couples filing jointly) there is still time to reduce your income for 2019.

Get your paperwork in order

Let’s face it, tracking down all the necessary documentation is a drag. It’s probably the biggest reason we procrastinate. Making sure you have all of your W-2s, 1099s, along with receipts for charitable contributions is cumbersome, but doing so ahead of time will reduce the potential for error and help you maximize your refund. Further, it will give you a sense going in whether you will be taking the new(ish) standard deduction or itemizing, which will save you a lot of time as you prepare.

Use your refund wisely

It might be tempting to spend that money on a much needed vacation, but make sure you have your ducks in a row before you treat yourself. If you are due for a return, ask yourself these questions:

Do I have high interest debt? Using a lump sum to pay off a credit card will save you a fortune over the course of the year.

Do I have enough in emergency savings? With a recession looming, having several months of reserves for a rainy day is more important than ever.

Do I have enough in my investment accounts? If you have serious concerns about being able to meet your retirement goals, consider using your refund to add some juice to your savings.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on News Radio 830 WCCO on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com. Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment adviser. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL.