As the April 18 deadline for filing your federal and state income tax returns approaches, many taxpayers are scrambling to meet their obligations.
Current Tax Season Overview
So far this tax season, the IRS has received more than 100 million income tax returns for the 2022 tax year. This indicates that tens of millions of households have yet to file their returns. If you are among them, here are some last-minute tax-filing tips to keep in mind.
Know Your Filing Requirements
Not everyone is required to file by April 18. If you live in a federally declared disaster area, have a business there, or have relevant tax documents stored by businesses in that area, the IRS may have extended your filing and payment deadlines. For example, tax filers in most of California have been granted an extension until October 16 due to recent extreme weather.
Additionally, members of the armed forces stationed in a combat zone typically receive a 180-day extension on their filing and payment deadlines, depending on their departure date from the zone.
Filing for the First Time?
If you made little to no money last year (generally less than $12,950 for single filers and $25,900 for married couples), you may not be required to file. However, you might consider filing anyway if you believe you are eligible for a refund through refundable tax credits like the Earned Income Tax Credit.
For those with an adjusted gross income of $73,000 or less, using IRS Free File can make filing cost-effective.
Organize Your Documents
By now, you should have received all necessary tax documents from third parties such as your employer and bank. If you don’t remember receiving a hard copy, check your email and online accounts, as some documents may have been sent electronically.
It’s crucial to be aware that some taxable income does not come with a specific form. For instance, if you rented out your vacation property, you are responsible for reporting that income yourself.
Last-Minute Tax Strategies
If you are eligible to make a tax-deductible contribution to an IRA, you have until April 18 to contribute up to $6,000 ($7,000 if you are 50 or older), which can reduce your tax bill while enhancing your retirement savings.
Proofreading Your Return
Before submitting your return, whether using tax software or a professional preparer, ensure that you proofread it thoroughly. Errors such as typos in your name, birth date, or Social Security number can delay processing and refunds.
If You Can’t File on Time
If you cannot file by April 18, complete Form 4868 electronically or on paper and submit it by the deadline to receive an automatic six-month extension to file. Remember, however, that this is not an extension to pay; you will incur interest and penalties on any amount owed that is not paid by the deadline.
To avoid penalties, if you suspect you owe taxes, estimate the amount and send it to the IRS by the end of the day, either by mail or electronically at IRS.gov.
Refund Expectations
If you are expecting a refund, the IRS usually processes it within 21 days of receiving your return. However, be aware that your refund may be smaller this year due to the expiration of several COVID-related tax breaks. The average refund so far this tax season was $2,878, down from $3,175 last year.
Audit Concerns
Audit rates for most taxpayers remain low, with only 0.1% of filers reporting incomes between $50,000 and $200,000 audited in 2020. The IRS plans to focus more on auditing high-income individuals, defined as those making $400,000 or more.
Utilizing IRS Resources
The IRS offers an interactive tax assistant that can help answer over 50 basic questions related to income, deductions, and credits, providing valuable guidance as you navigate your tax responsibilities.
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