With the April 18 deadline to submit your 2022 federal and state tax returns looming, here's what you need to know whether you've already filed or are still preparing. This tax season has been smoother than the last three, which were disrupted by the pandemic. IRS Commissioner Danny Werfel noted that this is the first tax season since 2019 where operations have returned to normal.
Since January, the IRS has improved its service, answering 87% of taxpayer calls compared to less than 15% last year, and reducing wait times from 27 minutes to just 4 minutes. New online tools have also been introduced to assist filers.
If you're rushing to meet the deadline or considering an extension, here are some important points:
1. **Extended Deadlines for Some:** If you're in a federally declared disaster area or have business there, your filing and payment deadlines may already be extended. Most California residents, for example, have until October 16 due to recent extreme weather.
2. **Military Extensions:** Military personnel in combat zones typically receive a 180-day extension for filing and payment.
3. **Low Income Filers:** Those with minimal income might not need to file, but doing so could be beneficial if eligible for refundable credits like the Earned Income Tax Credit. IRS Free File is available for those with an adjusted gross income of $73,000 or less.
4. **Income Sources:** Remember to report all income, not just from full-time jobs. This includes any taxable income like rental income.
5. **Tax Documents:** Ensure you have all necessary tax documents, which may have been sent electronically.
6. **IRA Contributions:** You can still make tax-deductible IRA contributions for 2022 until April 18, potentially lowering your tax bill.
7. **Review Your Return:** Double-check your return for errors to avoid delays in processing and receiving any refunds.
8. **Filing Extensions:** If you can't file by April 18, submit Form 4868 for a six-month extension. Note that this doesn't extend the payment deadline, and interest and penalties apply to unpaid taxes after April 18.
9. **Payment Options:** Pay any owed taxes by mail or electronically. Electronic payments can automatically extend your filing time without needing Form 4868.
10. **State Taxes:** Don’t forget to check if you need to file for an extension and make payments for state taxes.
11. **IRS Assistance:** Use the IRS's interactive tax assistant for basic questions.
For those who have already filed, refunds are typically processed within 21 days but may be smaller this year due to the expiration of Covid-related tax breaks. The average refund has decreased compared to last year.
Regarding audits, the likelihood remains low for most taxpayers. The IRS plans to focus more on high-income earners, using funds from the Inflation Reduction Act, but does not expect to increase audit rates for those earning less than $400,000.