Tax season is upon us again. Tax is one of those things about adult life that nobody enjoys doing but everybody has to do. Not only is doing taxes boring but it can also be a confusing pain in the neck. How do you want to deal with the 2022 tax season? Do you want to do it the hard way by driving yourself to distraction amidst the confusion or do you want to go the easy route by getting clued up early? We knew you’d want to make things easier on yourself so we’ve compiled everything you need to know about this year’s tax season and it’s all right here.
Tip: The IRS has warned us about returns processing delays and recommends electronically filing your taxes and putting a direct deposit in place for faster refunds.
What’s Your 2021 Tax Return Deadline?
Living with a pandemic has caused everyone a serious headache or two and the IRS is no exception. They’ve already started accepting 2021 tax returns as of the 24th of January and they’re estimating around 160 million tax returns being filed this season. That’s a lot of paperwork! So, by when do you need to make sure your paperwork is waiting in line to be processed?
There are a few dates set as deadlines and it all depends on which state you’re in.
- Most taxpayers will have until Monday the 18th of April, 2022.
- If you’re in Maine or Massachusetts, you’ll have until the 19th of April 2022 because Patriot’s Day is celebrated on the 18th in those states.
- If you’re in Illinois, Kentucky, or Tennessee and happen to be a victim of a winter storm, you can have an extension until the 16th of May 2022.
- In Colorado, victims of winter winds and wildfires can have an extension until the 16th of May 2022.
Tip: For more information about disaster situations and tax returns, visit the IRS’ website.
What about state tax return deadlines?
41 states in the US collect income tax. Most of these states are sticking with the due date of the 18th of April but there are a few states that will have different deadlines.
- Delaware and Iowa: 30th of April 2022
- Virginia: 1st of May 2022
- Louisiana: 15th of May 2022
Tip: To be on the safe side, always check the most up-to-date deadlines and other important information at your particular state’s department of revenue.
What About Extensions?
Sometimes life gets in the way and you legitimately need an extension for filing your taxes. What do you do in the case of needing an extension? Again, it depends on where you live but the deadline for requesting an extension would be either the 18th or 19th of April. However, that’s not all you need to know.
- Once you’ve applied for and been granted an extension, you’ll have up to the 17th of October 2022 to complete and file your 2021 tax return.
- Being given an extension for filing taxes doesn’t mean you get an extension for paying taxes. To avoid racking up late penalties, you’ll still have to pay the IRS an estimation of what you owe on time.
What if I Miss My Deadline?
Federal and state taxes may differ so it’s always best to check with the department of revenue in your state but generally, if you’re owed a refund, filing your federal taxes late doesn’t carry a penalty.
Tip: Play it safe by electronically filing your tax returns as early as possible. If you’re mailing your forms, ensure you do it early and get it postmarked on the date you mail them.
If the shoe is on the other foot and you owe the IRS money, it’s a different story.
- Interest and penalties start racking up from the moment you miss your tax filing deadline if you have any outstanding taxes.
- Every month your return is late costs you a late-filing penalty of 5% of the balance you owe.
- After 2 months, or 60 days, late fees can increase up to 25% of what you still owe on your taxes.
- If you’re late in paying your owed taxes, every month your payment is late could cost you 0.5% of the amount owed and, depending on how long you take to file your taxes, penalties could go up to 25% of the unpaid balance.
Important: You may be given extra time to file your taxes if you are in the military and serving in either a combat zone or as part of a contingency operation that is supporting the armed forces.
Should You File Your Taxes Early?
You know that old saying, “Better late than never.”? Well, you should definitely take the opposite approach to filing for tax returns. The IRS likes it when you plan ahead and get your refund affairs in order as early as possible because it makes their lives easier.
If you are the one owing money, on the other hand, you may want to hang in there before filing. Why? You get to hold onto your money for a little longer and take the time to figure out a payment method.
Tip: Whether you’re going to actually file your taxes immediately or not, it’s always a good idea to get your paperwork and sums in order as soon as you can. This gives you time to ensure you’ve got your 1099 and figure things out if there’s any confusion.
How Early Can I File My 2021 Taxes?
Filing for returns opened up on the 24th of January. If you are ready to file your tax returns, go ahead. There’s no time like the present!
Tip 1: You don’t have to put your 2021 return filing on hold until your 2020 return processing has been completed. You can file your 2021 tax return while you’re waiting!
Tip 2: If you made $72,000 or less in 2021, you can file your return free electronically using software offered by participating providers thanks to a collaboration between prominent tax-software companies and the IRS called IRS Free File.
What You Need To Know About Tax Refunds
Does the IRS owe you a tax refund? If you answered ‘yes’, then this is what you need to know.
File Your Return Electronically
Technology supports almost every part of our daily lives, including filing your taxes. In fact, it’s there to help make the process less of a thorn in your side. It can help you side-step delays typically associated with processing and issuing tax refunds, recovering rebate credits, and child tax credits.
Set Up A Direct Deposit For Refunds
What could be easier or faster than a direct deposit straight into your bank account? Nothing! You can set up a direct deposit on a bank account, mobile app, or prepaid debit card.
Tip: You can use the National Credit Union Locator Tool or open a bank account with an FDIC-Insured bank to set up a direct deposit for your tax return.
Want To Check Your Refund Status?
You can start checking on the status of your tax refund:
- 24 hours after filing it electronically
- 4 weeks after mailing it
You can check the status on the IRS website’s helpful web tool, irrespective of whether you filed it by mail or electronically. Alternatively, you could turn to your mobile phone for help tracking what’s happening with your refund by using the IRS2Go app.
What will you need in order to check your refund status?
- Social security number or ITIN
- The exact amount you’re being refunded
- The filing status
Tip: A filing status that says ‘received’ means the IRS has received your return and is busy processing it. A filing status that says ‘approved’ means that your tax refund has been approved and it’s now on its way to you.
What Do You Do With Your Refund?
To be quite frank, what you do with your money is entirely up to you. It’s a personal choice but every choice comes with consequences.
Oh, that sounds ominous, doesn’t it? The word ‘consequence’ has a bad connotation attached to it. People think of it in terms of something bad happening as a result of an action or decision. The truth is consequence is just that, a result, and it can be either good or bad.
You could take the approach that your refund is ‘splurging’ money to spend on something like a shopping spree or a holiday but is that really the best course of action? Probably not. So, what should you be doing with your refund money?
A good idea for handling your refund is to treat it as an investment. Whether you want to stow it away as part of a retirement fund, use it to save up for your children’s future, or build up a nest egg for emergencies; using your refund wisely will pay dividends. In this case, the consequences of saving that money are positive and you’ll be thankful you did somewhere down the line when you really need those extra bucks.
There you have it– everything you need to know to get started on your 2021 tax return! If you need any help, feel free to reach out to Flash Tech Tax — your Tax Whisperer!
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