Haven't Filed Your Taxes Yet? Here's What You Need to Know

United States - Ekhbary News Agency

Haven't Filed Your Taxes Yet? Here's What You Need to Know

With the 2022 tax filing deadline of Tuesday, April 18, rapidly approaching, millions of American households are facing the pressure of submitting their tax documents. The Internal Revenue Service (IRS) has received over 100 million tax returns so far, indicating that tens of millions are still pending. For those who haven't managed to meet this deadline, understanding available options and necessary procedures to avoid penalties is crucial. This report provides a comprehensive guide to help navigate this critical period.

Deadline Extensions: Important Exceptions to Consider

It's important to note that the April 18 deadline isn't a universal rule. The IRS has automatically extended tax filing and payment deadlines for individuals and businesses located in federally declared disaster areas. Taxpayers can check specific extension dates for each disaster zone on the official IRS website. For instance, due to numerous rounds of severe weather in recent months, taxpayers in most of California—representing a significant portion of federal filers—have already received an extension until October 16 to file and pay their taxes. Members of the armed forces currently or recently stationed in a combat zone also benefit from an automatic 180-day extension for their 2022 tax filing and payment deadlines, with the specific date dependent on their departure from the combat zone. IRS publications offer further details on these exceptions.

Are You Required to File a Tax Return?

Not everyone is obligated to file an annual tax return. If your annual income is very low—typically below $12,950 for single filers and $25,900 for married couples filing jointly—you might not be legally required to file. However, it may still be beneficial to file if you believe you are eligible for a tax refund, particularly through refundable tax credits like the Earned Income Tax Credit (EITC). IRS free file tools can help assess if filing is necessary. Additionally, individuals with an adjusted gross income of $73,000 or less are often eligible for the free IRS Free File service, providing a cost-effective way to submit returns.

Multiple Income Sources: Beyond the Paycheck

Many individuals might assume their only reportable income is their salary from a single full-time job. However, the tax reality is often more complex. Other potentially taxable and reportable income sources include:

• Freelance or gig work income.
• Investment gains from stocks, bonds, and real estate.
• Rental income from properties.
• Gambling winnings or prizes.
• Bank account interest.
• Unemployment or disability benefits.
• Cryptocurrency earnings.

It is essential to identify all potential income streams and report them accurately to avoid issues with the IRS.

Organizing Tax Documents: The Key to Accuracy

All necessary tax documents should have been received from third parties, such as employers, banks, and brokerages. If a hard copy wasn't mailed, it was likely sent electronically. Regularly check your email accounts and online portals. Common tax forms include:

• Form W-2: Reports wages and taxes withheld by an employer.
• 1099 Forms: Cover various types of income, such as freelance income (1099-NEC), interest income (1099-INT), or capital gains (1099-B).
• Brokerage Statements: Detail gains and losses from selling assets.

Remember, some taxable income, like proceeds from renting out property, may not have a specific form. In such cases, you are responsible for proactively reporting it, as noted by the Illinois CPA Society.

Strategies to Reduce Your Tax Bill

For those still seeking ways to lower their 2022 tax liability, options exist. You can make a tax-deductible contribution to an Individual Retirement Arrangement (IRA) up until the April 18 deadline. The maximum contribution is $6,000, or $7,000 if you are age 50 or older. These contributions not only reduce your current tax bill but also boost your retirement savings.

Final Proofread: Avoiding Costly Errors

Whether you use tax software or work with a professional, a thorough proofread of your tax return before submission is vital. Minor mistakes, such as typos in names or Social Security numbers, incorrect filing status selection, mathematical errors, or leaving required fields blank, can delay the processing of your return and the issuance of any refund owed. Carefully verify all information, including bank account details for direct deposit.

What to Do If You Can't File by April 18

If you are unable to file your tax return by the deadline, don't panic. You can request an automatic six-month extension by electronically or paper-filing Form 4868 before April 18. However, it's crucial to remember that an extension to file is not an extension to pay. Interest (currently at 7% annually) and penalties will be charged on any amount owed past the original deadline. Therefore, even with an extension, estimate your tax liability and pay it as soon as possible to minimize additional charges.

Conclusion

While the tax filing deadline can be a source of anxiety for many, understanding the exceptions, potential income sources, the importance of organization, tax-reduction strategies, and error-avoidance steps can make the process more manageable. Staying informed, connecting with the IRS, and seeking professional assistance when needed are prudent steps to ensure compliance and avoid future complications.

Ekhbary News Agency