Even working under a tight calendar, farmers and ranchers are used to making quick financial decisions when conditions are right. Plant between thunderstorms? Take advantage of an equipment sale?
When the federal and state governments recently announced tax deadlines were pushed back, producers were presented with a similar question: File now or later? Does a typically dark cloud actually have a silver lining this time?
Oklahomans usually scramble to get their taxes filed by the April 15 deadline. However, the IRS deadline for 2020 tax returns has been extended to May 17.
The Oklahoma Tax Commission issued a statement adjusting the state’s deadlines explaining that Oklahomans now have until June 15 to pay their 2020 individual and business income taxes; the same is true of first quarter 2021 estimated income tax payments. Shortly after the OTC statement, the Internal Revenue Service posted its own extension. The IRS said individual taxpayers can also postpone their federal income tax payments for the 2020 tax year normally due on April 15 to May 17 instead.
For many qualified Oklahoma farmers, the deadline shuffle is a moot issue, said J.C. Hobbs, Oklahoma State University OSU Extension associate specialist and coordinator of OSU Tax School. By filing before March 1, those producers don’t have to pay estimated taxes for the year, a significant benefit that many have already taken advantage of, Hobbs said.
For others in the agriculture industry, the decision depends on personal context, Hobbs said, a point echoed by Trent Milacek, OSU Extension’s west area agricultural economics specialist.
“It depends on how their businesses were affected,” Milacek said. “If they’re still struggling to bring in revenue, it might be a benefit to wait. Otherwise, you’re just putting off the inevitable.
“If you push back the deadline, it can help you financially if you don’t have the money on hand to pay, or it could help from the standpoint of labor — your accountant is short-staffed or your having trouble collecting paperwork,” he said. “On the other hand, if you’re getting a refund, waiting does you absolutely no good.”
Taxpayers need to look closely at other deadlines in the process as well, said Cindy Clampet, Oklahoma State University Extension assistant family resource management specialist. For example, due dates for other tax types, including sales and withholding, remain the same this year. The OTC posted a comprehensive explanation of the order, including frequently asked questions and a detailed list of all qualifying tax payment extensions.
“Although the deadline technically has been extended to file both state and federal taxes, the dates for 2021 estimated taxes have not changed — the first payment deadline remains April 15,” Clampet said. “Estimated taxes typically are paid by self-employed persons and those who make an income that has not had enough taxes withheld.”
Concerning pandemic stimulus checks — referred to as “economic impact payments” by the IRS — which many people received in 2020, those funds won’t reduce refunds or be counted as taxable income. For those who received unemployment benefits in 2020, income taxes are owed on those payments, Clampet said.
Clampet suggested paperwork that should be gathered in preparation for filing taxes, such as:
- All W-2s.
- 1099 forms.
- Bank forms stating interest earned.
- Medical/pharmaceutical receipts.
- Receipts for childcare.
- Receipts for donation to charities and 501c3 companies.
- Mortgage interest documents.
- College loan interest payment documents.
If doing your own taxes, forms are available at the IRS website. Taxpayers also can use the free “e-file” feature found on the same website.
Clampet suggested taking the information to a qualified tax preparer if the taxpayer has doubts or questions. For individuals who make less than $57,000 per year, are disabled or have limited English language skills, volunteers in the AARP’s Volunteer Income Tax Assistance program are available to help via 800-906-9887.
Once the return is completed, print a copy for your personal records. This is important for e-filing options and using the U.S. Postal Service.
Tax season can be just as tricky for college students facing the implications of paying tuition and fees, taking out loans and paying interest, and receiving grants and scholarships. Again, the IRS offers resources to help, and a professional preparer can answer questions about the process.
“Some grants and scholarships may be taxable and loan interest paid may be deductible, depending on if the student meets certain qualifications,” Clampet said. “Check the IRS website for the entire list of qualifiers. Some students deferred loan payments and interest was stopped for a time due to the pandemic. Those factors may affect tax status more than in previous years.”