Vital Information for Tax Season: Whether You've Already Filed or Still Need to
April 18 is the official due date for submitting your federal and state income tax returns for 2022, a deadline that coincides amusingly with National Animal Crackers Day. This tax season has been smoother than the previous three which were negatively impacted by the pandemic.
For the first time since 2019, the IRS and the nation have operated under normal circumstances. IRS Commissioner Danny Werfel highlighted that due to an increase in funding after years of budget cuts, IRS employees have managed to respond to 87% of calls from taxpayers with queries. This is a sizable improvement from last year's 15% response rate. Call waiting times have also decreased from 27 minutes to just 4 minutes. The IRS has further equipped taxpayers with new online tools to make the process easier.
These tools could be of great help if you're rushing to meet the deadline or if you've realized you need to file an extension. Here are a few crucial points to remember:
- Not all taxpayers are required to file on April 18. For those living or running a business in federally declared disaster areas, or those with tax documents stored in such areas, the IRS has likely extended your filing and payment deadlines. For example, due to recent extreme weather, most tax filers in California, which comprises 10% to 15% of all federal filers, have been granted an extension until Oct. 16.
- If you're a member of the armed forces who is or was recently stationed in a combat zone, your 2022 tax filing and payment deadlines are likely extended by 180 days, but the exact dates depend on when you leave or left the combat zone.
- If your income was low last year (generally less than $12,950 for single filers and $25,900 for married couples), you might not be required to file a return. However, filing might still be beneficial if you're eligible for a refund due to refundable tax credits like the Earned Income Tax Credit. The IRS offers a free filing tool for those with an adjusted gross income of $73,000 or less.
- Your full-time job might not be your only source of income. Other potential sources of taxable income include rental income, dividends, and freelance work.
Before submitting your return, make sure to proofread for any errors. Small mistakes can delay the processing of your return and any due refunds. Avoid typos in your name, birth date, Social Security number, or direct deposit number, and ensure all required fields are filled out correctly.
If you're unable to file by April 18, submit Form 4868 electronically or on paper to get an automatic six-month filing extension. However, this extension does not apply to payments, and you may be charged interest and a penalty on any unpaid amount. It's recommended to estimate and pay any remaining tax due by the end of the day. If you're unable to pay in full, the IRS offers payment plan options, but it might be wise to consult a tax preparer or certified public accountant first.
The IRS's 'interactive tax assistant' can answer over 50 basic questions relating to your individual tax situation. If you've already filed your return, you might still be wondering about your refund. Typically, the IRS sends refunds within 21 days of receiving your return, but due to expired Covid-related tax breaks, your refund might be smaller than last year.
In terms of audits, rates are extremely low. For taxpayers reporting incomes between $50,000 and $200,000, only 0.1% were audited in 2020. For very high-income filers, rates were still relatively low. However, the IRS plans to increase its focus on auditing high-income individuals earning $400,000 or more, while the likelihood of audits for those earning less is not expected to change.