7 tips to get you through Tax Day 2022
Monday, April 18, 2022
Tax things are sort of back to normal. It's April, the traditional month in which our returns are due. And while today's Tax Day is a few a few days late thanks to the Emancipation Day holiday, it's here.
So now what? Here are some things to do to take care of your 2021 tax return, and more, on Tax Day 2022.
Ultimate tax procrastinators: It's not unusual for millions to wait to file. Last year, more than 21 percent of people who ultimately filed a return did so in the last week before Tax Day, which was delayed until May 17 due to COVID considerations, or later.
Some folks are essentially done with their 1040 forms. They just want to give them another look before hitting "send" to e-file or dropping them off at their local U.S. Postal Service branch to be postmarked April 18.
Survey says: That's the reason given by some in a recent survey of taxpayer filing attitudes. Twenty percent of those surveyed by IPX1031, a Fidelity National Financial company that specializes in the sale and exchange of your business assets, said they don't file until they absolutely must because they want to make sure their returns are correct.
Almost a third of taxpayers told IPX1031 they weren't in a rush because they weren't getting a refund.
A quarter of tax procrastinators said the process was too complicated or stressful. Eleven percent said filing took up too much of their time. And 7 percent simply wanted to ignore the responsibility because they were worried they'd owe Uncle Sam.
Overall, 32 percent of taxpayers said they will wait until the last minute, with IPX1031 finding that millennials ae the biggest tax procrastinators. IPX1031 says this year's most tax-filing averse populations are in Nevada, Hawaii, Georgia, Alaska, and California.
If you're among any of those tax procrastinating segments, here are seven quick Tax Day 2022 tips to help you make it through these final filing hours.
1. File something. You need to send the IRS either your 2021 Form 1040 or Form 4868, which will give you until Oct. 17 to finish up your return.
If you file electronically, which the IRS recommends and is the option most taxpayers choose, you've got until midnight in your time zone to punch send on your computer keyboard. But it's better not to wait that long. A literal last-minute filing crunch could pose bandwidth problems. The last thing you want is a computer crash to make your filing late.
Folks whose adjusted gross income is $73,000 or less, regardless of filing status, should check out Free File. This decades old offering by the Internal Revenue Service and some tax software companies — there are eight participating companies this year — provide online tax return preparation and e-filing at, as the name says, no cost.
If you're an old-school tax holdout still filling out your 1040 by hand, you need to get your tax material to your local Post Office so that it gets today's postmark. The IRS accepts a Tax Day postmark as proof of timely tax filing, meaning you won't get his with late-filing charges.
2.Get more time to file. Taxes just aren't happening today. I've been there. But you do need to file for an extension. By submitting Form 4868 today, you'll get six more months to finish up your 1040 and other forms. This also will stop any non- or late-filing penalties that will kick in if you don't file a return or automatic extension request today.
3. Pay any tax you owe. If you file for an extension, note that this form is just what the title says it is: an Application for Automatic Extension of Time To File U.S. Individual Income Tax. It is not an extension to pay any tax you owe. So send along your tax due, or as much of it as you can, with your Form 4868. You also can use any of the variety of IRS offered tax payment methods, including alternative payment methods if your tax bill is surprisingly large.
4. File your state taxes, too. Most Americans live in states that collect some type of individual income tax. And most of those state tax departments are following the IRS' filing schedule. That means you must file and pay your state (and in some cases, local) taxes by today, too. Check with your state's tax office about possible extensions. Or if you're ready to file state returns, check into free e-filing options offered by most states.
5. Pay your 2022 estimated taxes. Millions of filers get income that isn't subject to payroll tax withholding. This includes investment income and, in a growing number of cases, money earned from freelance or gig work. To avoid facing a big tax bill, not to mention potential penalties and interest, when you file your annual return, you need to pay tax on that money throughout the year by making estimated tax payments, either electronically or by sending in a Form 1040-ES voucher. These are due four times a year, with the first one for 2022 due today, April 18.
6. Make other tax-related payments. Tax Day also is the deadline to put money into an individual retirement account, either to a traditional or Roth IRA, and have the contribution apply to the prior tax year, 2021 in this case. The same contribution guideline is true for health savings account (HSA) accounts. And if you held money or other assets abroad, today is the deadline to electronically file your Report of Foreign Bank and Financial Accounts (FBAR), aka FinCEN Form 114, with the U.S. Treasury Department's Financial Crimes Enforcement Network, the full name of the usually used FinCEN acronym.
7. File your 2018 tax return. This is not a typo or some sci-fi tax time travel, although that would be cool. It's a reminder that if you didn't file a 2018 tax year return back in 2019 and were due a refund, you must file that old 1040 today or never see that tax cash. The IRS holds onto unclaimed refunds for three years. If the rightful taxpayers don't collect the money by then, it stays in the U.S. Treasury account. So file that old return today forever kiss your unclaimed refund money goodbye.
Three Tax Day to-do takeaways: I know, this is a lot to deal with today. So here are my three big takeaways of what to do on Tax Day 2022.
First, file an extension and pay any, even if it not all, tax you owe. This will give you months to deal with submitting an accurate 2021 Form 1040. Most states offer extensions in line with the IRS timetable, too.
Second, make your first quarter 2022 estimated tax payment. There is no extension for these payments. If you don't pay enough or on time, you could face penalties even if you true up your tax bill next filing season or even next quarter.
Third, if you can afford to, make any contributions to tax-favored and/or tax saving accounts. Money put into a traditional IRA for last year might offer a deduction on your return when you finally file it. Even if you don't get an immediate tax break, you'll maximize the amount of your nest egg that will keep growing tax-deferred or, with a Roth, tax-free.
Here's hoping you get through these final hours of Tax Day 2022 in good, and tax saving, shape.
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