If you’re one of those procrastinators who still haven’t filed your taxes, you’re not alone. About a third of Americans wait until the very last minute.
A survey of IPX 1031 finds that the most common reason for delay this year is the belief that if there is no refund, there is no urgency to file. Almost a third of respondents use this excuse, while 25% say reporting is too stressful and a further 20% say they want to make sure they are reporting correctly.
Waiting to file because you think you won’t get a refund is a big mistake. According to tax experts, you may be eligible for credits and deductions that you didn’t know were available.
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“Many small business owners forget about their vehicle and home office tax breaks,” said Eric Pierre, CPA and CEO of Pierre Accounting in Austin, Texas. “You may miss a deduction that could get you a large refund.”
Also, “if you owe money, you should at least file the return and set up a payment plan, or send money to the IRS to reduce interest and penalties,” he said. declared.
The average tax refund is actually larger than it was last year. As of March 25, nearly 58 million tax refunds have been issued during the 2022 production season and the average payment is $3,263, approximately $400 more than the average refund for the 2021 production season. Also, according to most tax professionals, the earlier you file, the faster you will get your refund, provided you file your return electronically and request direct deposit.
With the tax filing deadline fast approaching, here are some do’s and don’ts you need to know.
File your tax return on time
The good news is that you have more time to file your tax return this year. The deadline for filing federal income tax returns is Monday, April 18 for most taxpayers, not the traditional April 15 date. So you have three extra days. The later date is due to the Emancipation Day holiday in the District of Columbia. By law, in Washington, DC, holidays impact tax due dates for everyone the same as federal holidays.
And taxpayers in Maine or Massachusetts have until April 19 to file their returns due to the Patriots Day holiday in those states. April 18 is also the filing deadline for most state tax returns, but some states (Delaware, Iowa, Louisiana, Maine, Massachusetts, Virginia) have different deadlines. Be sure to double-check your state’s tax return filing deadline.
Revise the Covid tax breaks
The IRS says it sees a number of common errors by taxpayers claiming incorrect amounts for their recovery refund credit and child tax advance credits. If you qualified for the third round of Economic Impact Payments issued last year but did not receive any or did not receive the full amount, you may be eligible to apply for the credit of recovery discount. The IRS should have sent you a letter stating the amount. Use this information to complete your return.
You should also refer to a letter from the IRS showing the amount of your child tax credit prepayment when you prepare your return.
“Some forget to include the advance childcare tax credit they already received in 2021 and try to get the full tax credit with the filing of their tax returns,” said said Genevia Fulbright, CPA and president of Fulbright & Fulbright in Durham, North Carolina. If you do that, “the IRS will make an adjustment and the refund will be lower or you may actually owe money depending on the tax situation,” she said.
If you think there is an error in the credit amount in these letters, contact the IRS before filing.
Additionally, like last year, the IRS will allow you to claim a deduction of up to $300 (or up to $600 for married couples filing jointly) for cash contributions made to certain qualifying charities in 2021, even if you claim the standard deduction. And if you itemize, you can claim a deduction for charitable contributions up to 100% of your adjusted gross income.
Declare all taxable income
Make sure you have all the documents relating to your taxable income on hand before you start filling out your return. You may have had multiple jobs and multiple W-2 or 1099-MISC forms declaring your salary and/or self-employment earnings. Include them all.
“Sometimes people have interest-bearing accounts that they forget and don’t file Form 1099-INT, or they forget they worked at jobs and drop W-2s,” said Sheneya Wilson, CPA and managing director of Fola Financial in New York. “It is very important for them to carry out a correct assessment of their financial year.”
Don’t forget to also include unemployment compensation. A special law allowed taxpayers to exclude unemployment benefits from taxes in 2020, but that was only for that year. Unemployment income is generally taxable and must be included on your return.
Don’t forget to check this box bitcoin
Do not leave blank boxes on the front of your statement where virtual currency is mentioned. Be sure to tick “Yes” or “No” to the question that asks if at any time in 2021 you received, sold, traded, or transferred a financial interest in a virtual currency. Failure to do so could be a big red flag for the IRS.
REMEMBER to deposit because you don’t have the funds
Many people don’t file taxes because they say they don’t have the money to pay the taxes they owe. This is a major mistake that can cost you dearly. The penalty for failing to file a return is 5% of your unpaid taxes for each month your return is late, up to 25% of your unpaid taxes.
And, if you don’t pay the tax you owe by the April deadline, you’ll have to pay 0.5% of the unpaid taxes for each month you’re late in filing, up to 25% of your unpaid taxes.
So, pay what you think you owe by April 18. If you’re worried about getting a tax bill that you know you can’t afford right now, consider applying for a payment plan. And if you don’t think you can complete your return on time, request an extension by April 18 and you won’t have to submit your return for six months – or until October 17.
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