Soaring inflation. The war in Ukraine. Yet another rise in Covid cases. With so much going on this year it’s been hard to focus on things like filing your taxes.
Nevertheless, the IRS still expects you to file your 2021 return and pay whatever you still owe by the filing deadline, which is Monday, April 18 for most taxpayers.
If you haven’t filed yet, here are answers to some key questions that will help you through the process:
Do I have to file by April 18?
Ideally, yes. But if that proves difficult – or you’re just not in the mood – drop what you’re doing this minute and file for an automatic six-month extension by using Form 4868.
Of course, there are some taxpayers whose filing deadline is later than April 18. They include residents of Maine and Massachusetts, whose official filing date is April 19. And the deadline is a month or more later for people living in federally declared disaster areas, as well as US taxpayers living outside of the United States on April 18.
If I do owe money, when is that due?
For most people, you have to pay any remaining 2021 income taxes that you still owe by the April 18 filing deadline, even if you get an automatic six-month extension to file.
What if I don’t pay on time?
You will have to pay even more than you owe, because you’ll be slapped with penalties and interest.
If you really can’t afford to pay on time, and you have a good reason for why, you can make your case to the IRS by attaching a statement to your return when you file. If the IRS accepts your explanation, it may waive the late payment penalty. At a minimum, you need to show that your failure to pay is not the result of “willful neglect.”
To show that, try to pay what you can when you file, even if it’s not the total balance. If that’s not possible and you’re really behind, you may be able to set up a repayment plan with the IRS.
What if the IRS owes me money?
If you file an accurate return electronically, and are owed a refund, the IRS will likely have that money sent to you or direct deposited into your bank account within 21 days of receiving your return.
You can check the status of where things stand by using the IRS online tool Where’s My Refund?
If you’re not legally required to file a 2021 tax return because your income was too low, you may want to file a return anyway since you’re likely due a refund thanks to the enhanced child tax credit and other tax breaks that you are eligible to claim even though you don’t owe income tax.
I was working remotely for much of 2021. Will that affect my taxes?
It depends. If you worked from a state other than the one where your employer is based, you could be subject to the income tax rules of two or more states.
At the very least you’ll likely have to file more than one state tax return for 2021, which will cost you more if you’re paying someone else to prepare your taxes.
And in some instances – primarily involving five states that have so-called convenience rules – you may even be double-taxed on the same income.
(Learn more here.)
The advanced child tax credit is so confusing. How should I handle that on my tax return?
Good news: You are not imagining things. The child tax credit is causing headaches for both filers and tax pros alike.
There were a lot of temporary changes made to the child tax credit just for 2021. For starters, it was raised to $3,600 per child ages 5 and under, and to $3,000 per child ages 6 through 17.
It was also temporarily made fully refundable for 2021, meaning you can get the maximum amount of the credit even if it exceeds your federal income tax liability.
But here’s where the real confusion comes in: The IRS likely has already sent you half the credit you’re entitled to (six months’ worth) through monthly checks sent out between July and December.
You should have gotten a letter from the IRS in the past couple of months detailing what you’ve been paid already. That’s an amount you will need to report on your return. And then you will have to claim the other half of the credit you’re owed, which you will get by way of a refund.
(Learn more here.)
I got an IRS letter saying it sent me a stimulus check. Is that reportable and taxable?
The IRS recently mailed Letter 6475 to taxpayers who received a third round stimulus payment, which the agency started sending out in March 2021.
While the payment isn’t taxable, you should report the number from that letter on your 2021 return. The last thing you want is for there to be a discrepancy between the IRS records and what’s on your return. That will cause delays in processing your return and issuing your refund.
And you’ll want to use that number to work out whether the IRS actually owes you more by way of a recovery rebate credit, once you calculate how much more of the stimulus payment you’re due on the basis of your actual 2021 income. Taxpayers who earned less in 2021 than 2020 may be eligible for more money. The same goes for anyone who had a child last year. And for very low-income taxpayers who didn’t receive any payment, filing a return now is your chance to claim it.
I have cryptocurrencies. Do I have to report that?
Just buying and holding cryptocurrencies are not taxable events.
But if you sold cryptocurrencies, used them to buy something or were paid in crypto, those are taxable events and must be reported.
Virtual currencies are taxed as property, or as an investment, when you sell them. To make matters more confusing, using them to buy something technically counts as selling. So you will be subject to capital gains tax when you sell them.
If you’re paid in bitcoin or other crypto, on the other hand, that will be treated as taxable income to you. So will income earned from mining or staking.
And starting next year your crypto activities will be subject to third-party reporting – meaning both you and the IRS will get the same tax forms reporting your sales and income.
I can’t get through to the IRS and have a question. What should I do?
It’s been very difficult for taxpayers and tax pros alike to reach the IRS by phone because the agency is too understaffed to handle the volume of calls.
If you’ve already invested time combing through the information resources on IRS.gov to find an answer to your question, you might consider an in-person visit to a Taxpayer Assistance Center near you.
Normally you need to make a weekday appointment. But the IRS announced that many of its Taxpayer Assistance Centers will be open to walk-ins on the second Saturday of each month through May. You can find your local office here. Call first to make sure they’ll be open on the day you want to go.
What if my tax preparer makes a mistake on my return?
Honest mistakes can happen. But remember: You are responsible for the information on your return. So review your tax preparer’s work before signing off on it.
The US Department of Justice also cautions consumers to work only with someone reputable and competent. Otherwise, you could be left liable for unpaid taxes, penalties and interest.
Telltale signs a preparer may be scamming you: They ask you to sign a blank return, will not let you review your return before filing it, or want to deposit your refund in a way you don’t understand.
If you think you do not need to submit a tax return, for example because all your income is taxed under PAYE and you have no additional tax liability, you can phone HMRC on 0300 200 3310 and ask for the tax return to be withdrawn. If HMRC agrees, this will means that you no longer have to file a return.How do I file a business tax return? ›
Online ITR for business income
Step 1: Visit the official website for the filing of ITR-4, which is the income tax e-filing portal www.incometaxindiaefiling.gov.in. Step 2: Log in to your account by entering PAN, password, and the Captcha code. Step 3: On the "e-file" menu, choose the "Income Tax Return" link.
- your ten-digit Unique Taxpayer Reference (UTR)
- your National Insurance number.
- details of your untaxed income from the tax year, including income from self-employment, dividends and interest on shares.
- records of any expenses relating to self-employment.
The state used federal pandemic aid to provide these direct payments to low-income residents, and more than 236,000 households received a payment. All payments were distributed by direct deposit or mailed check between June 23 and July 1, 2022.How much money do you have to make to not pay taxes 2021? ›
In 2021, for example, the minimum for single filing status if under age 65 is $12,550. If your income is below that threshold, you generally do not need to file a federal tax return.Do I need to complete a tax return if I am retired? ›
After you've retired, you still have to pay Income Tax on any income over your Personal Allowance (find out more below). This applies to all your pension income, including the State Pension. Many people assume that their pension income – especially the State Pension – will be tax-free, but that's not the case.What happens if you don't register as self-employed? ›
Dangers of not notifying HMRC at once
If you fail to notify HMRC at once that you have stopped being self-employed, you could find that HMRC continues to send you self-assessment tax returns after you have stopped trading. If you ignore these returns you could be liable for penalties.
- Child Tax Credit.
- Income Support.
- Housing Benefit.
- Working Tax Credit.
- Income-based Jobseeker's Allowance.
- Income-related Employment and Support Allowance.
Generally, you must pay SE tax and file Schedule SE (Form 1040 or 1040-SR) if either of the following applies. If your net earnings from self-employment were $400 or more.How much is business income taxed? ›
A domestic corporate entity with a turnover upto Rs. 250 Crore, pays a flat rate of 25% corporate tax. For a particular financial year, if the total revenue earned by a company exceeds Rs. 1 crore, then a surcharge corporate tax of 5% is levied on such a corporation.
Most Small Businesses Don't Pay Income Taxes Directly
If you own a pass-through business and your estimated tax payments and tax withholding exceed the tax due on your return, you can receive a tax refund. Only C corporations pay income taxes directly, so C corporations are the only businesses that can get a refund.
National Insurance contributions are not deductible when determining taxable income for either the employed or self-employed, nor do you get National Insurance relief on self-funded employment expenses for example, as you may do for tax in limited circumstances.What documents do I need for tax return? ›
In order to process your tax return, your tax accountant will ask for your Tax File Number (TFN), bank details, private health insurance details (if any), the number of your dependent children. Your TFN is your unique identifier. There are only a few people who you should hand this number to.Can I do my tax return myself? ›
But in truth, anyone can file an accurate tax return without professional help. One alternative is to use tax software that adds up your income and expenses over the financial year. As long as you input your figures carefully, your calculations will be 100% error-free.Who's getting stimulus checks 2022? ›
Eligibility is limited to those who make $100,000 or less for single filers, $150,000 or less for heads of household and $200,000 or less for couples filing jointly. The first round of relief checks were mailed in June 2022, but checks are being sent out until the end of the year.Who gets the 4th stimulus check? ›
California: California will be giving payments of up $700 for joint filing couples earning less than $150,000 annually, with individuals qualifying for up to $350.Will seniors get a 4th stimulus check? ›
And this is with the checks for people over 60. Years old and the payments. Go up to 1400. And moreHow much can a 70 year old earn without paying taxes? ›
When seniors must file. For tax year 2022, unmarried seniors will typically need to file a return if: you are at least 65 years of age, and. your gross income is $14,700 or more.Does Social Security count as income? ›
You must pay taxes on up to 85% of your Social Security benefits if you file a: Federal tax return as an “individual” and your “combined income” exceeds $25,000. Joint return, and you and your spouse have “combined income” of more than $32,000.How much money can you make before you have to pay taxes 2022? ›
Under age 65. Single. Don't have any special circumstances that require you to file (like self-employment income) Earn less than $12,950 (which is the 2022 standard deduction for a single taxpayer)
Do I Need to File a Tax Return? | Internal Revenue Service
How to file your taxes for free and collect missing stimulus money
How to File Taxes: A Complete Guide for 2022
Tax code 1257L
It's used for most people with one job and no untaxed income, unpaid tax or taxable benefits (for example a company car). 1257L is an emergency tax code only if followed by 'W1', 'M1' or 'X'.
If the State Pension is your only income
You're responsible for paying any tax you owe. Fill in and send a Self Assessment tax return if you owe anything. If you started getting your pension on or after 6 April 2016, don't send a tax return.
The standard deduction for married couples filing jointly for tax year 2021 rises to $25,100, up $300 from the prior year.Do I need to do a tax return if I earn under 10000 UK? ›
If you're earning under £10000 when you're self employed, or even below the personal allowance threshold and have no tax to pay, you have to do a tax return.What does the L mean on my tax code? ›
The L Code: You qualify for the normal tax-free Personal Allowance. The M Code: Your partner has transferred up to 10% of their Personal Allowance to you. The N Code: You've transferred up to 10% of your Personal Allowance to your spouse.What does M1 mean on my tax code? ›
W1 (week 1) and M1 (month 1) are emergency tax codes and appear at the end of an employee's tax code, for example '577L W1' or '577L M1'. Calculate your employee's tax only on what they are paid in the current pay period, not the whole year.What does 0 mean at end of tax code? ›
0T. Your Personal Allowance has been used up, or you've started a new job and your employer does not have the details they need to give you a tax code. BR. All your income from this job or pension is taxed at the basic rate (usually used if you've got more than one job or pension)At what age do seniors stop paying taxes? ›
There is no specific age when seniors are no longer required to file a tax return. If a senior's only source of income is social security, they can stop filing tax returns. For seniors with income in addition to social security, their taxable income determines whether they need to file a return.Do you have to pay income tax after age 70? ›
If you are at least 65, unmarried, and receive $14,700 or more in non-exempt income in addition to your Social Security benefits, you typically must file a federal income tax return (tax year 2022).
You stop paying Class 1 and Class 2 contributions when you reach State Pension age - even if you're still working. You'll continue paying Class 4 contributions until the end of the tax year in which you reach State Pension age. For example, you reach State Pension age on 6 September 2022.Do senior citizens get a higher standard deduction? ›
Standard Deduction for Seniors – If you do not itemize your deductions, you can get a higher standard deduction amount if you and/or your spouse are 65 years old or older. You can get an even higher standard deduction amount if either you or your spouse is blind. (See Form 1040 and Form 1040-SR instructionsPDF.)What is standard deduction for 2021 for seniors? ›
Standard deduction amount increased.
The amounts are: Single or Married filing separately—$12,550. Married filing jointly or Qualifying widow(er)—$25,100. Head of household—$18,800.
If you're at least 65 years old or blind, an additional standard deduction of $1,350 is allowed for 2021 ($1,700 if you're claiming the single or head of household filing status). As with the 2022 standard deduction, the additional deduction amount is doubled if you're both 65 or older and blind.What is the penalty for not reporting income? ›
The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won't exceed 25% of your unpaid taxes.How much can you earn self-employed before declaring? ›
If you're self-employed, you're entitled to the same tax-free Personal Allowance as someone who's employed. For the 2022-23 tax year, the standard Personal Allowance is £12,570. Your personal allowance is how much you can earn before you start paying Income Tax.How much do I have to earn before I declare myself self-employed? ›
You need to set up as a sole trader if any of the following apply: you earned more than £1,000 from self-employment between 6 April 2021 and 5 April 2022. you need to prove you're self-employed, for example to claim Tax-Free Childcare.