If you haven't submitted your tax return yet, or even if you have, here's what you should know. The deadline for filing your federal and state income tax returns for 2022 is April 18. This year, the tax filing process has been smoother compared to the past three years, which were disrupted by the pandemic. According to IRS Commissioner Danny Werfel, this is the first tax season since 2019 where operations are back to normal.
Since January, with the help of new funding, IRS employees have managed to answer 87% of calls from taxpayers, a significant improvement from last year's 15%. The average wait time has also decreased from 27 minutes to just 4 minutes. The IRS has introduced new online tools for filers, which can be particularly useful if you're rushing to meet the deadline or need to file for an extension.
Not everyone must file by April 18. If you're in a federally declared disaster area or have a business there, the IRS may have already extended your deadlines. For example, most California residents, who make up 10% to 15% of federal filers, have been given until October 16 to file and pay due to recent extreme weather. Military personnel in combat zones typically have their deadlines extended by 180 days.
If you earned little to no income last year, you might not need to file a return. However, you might still want to if you're eligible for a refund through refundable tax credits like the Earned Income Tax Credit. You can use IRS Free File if your adjusted gross income is $73,000 or less.
Remember, your paycheck isn't your only income source. You may have other taxable income that needs reporting. Ensure you have all necessary tax documents, which might have been sent electronically. Some income, like rental income from a vacation property, might not come with a form, so you'll need to report it yourself.
If you haven't made a tax-deductible IRA contribution for 2022, you have until April 18 to do so, which could lower your tax bill and boost your retirement savings. Before submitting your return, proofread it to avoid delays caused by errors like typos or incorrect filing status.
If you can't file by April 18, submit Form 4868 for an automatic six-month extension. Remember, this doesn't extend your payment deadline. If you owe taxes, estimate the amount and pay by April 18 to avoid interest and penalties. Payments can be made electronically, which is more efficient than mailing a check.
If you can't pay in full, the IRS offers payment plans, but it's wise to consult a tax professional first. Don't forget to check if you owe state taxes and follow similar steps for extensions and payments.
For any questions, the IRS provides an interactive tax assistant online. If you've already filed, you might be curious about your refund, which is typically issued within 21 days. However, refunds may be smaller this year due to the expiration of Covid-related tax breaks.
Regarding audits, the likelihood is low for most taxpayers. In 2020, only 0.1% of those with incomes between $50,000 and $200,000 were audited. The IRS plans to focus more on auditing high-income earners, defined as those making $400,000 or more, using funds from the Inflation Reduction Act. For those earning below this threshold, the audit rate is not expected to change.