- This year, taxes are due April 18, 2022, so be sure you have that marked on your calendar.
- Organize your W-2s, 1099s, receipts and other necessary paperwork before you sit down to file.
- If you receive any sort of notice from the IRS, open and reply to it immediately to avoid filing your taxes incorrectly.
- Keep in mind that the tax rules have changed from the 2020 tax year and plan accordingly.
The IRS began accepting 2021 tax returns on January 24, 2022, in advance of the April 18 deadline.
And there are certainly benefits to filing your tax return early—you’ll be closer to the front of the line for receiving your tax refund, you’ll give yourself a bit more time to pay your balance if you owe taxes, and it can lower the risk of someone claiming your refund fraudulently.
But there is also an upside to putting it off. “One of the most common mistakes taxpayers make is filing their income tax return too early, increasing the risk of not including all 2021 tax information accurately in their return filing,” says Robbin Caruso, a CPA and partner and co-lead of Prager Metis’ national tax controversy practice, which specializes in tax disputes. “This may cause significant delays in processing returns and receiving refunds.”
So don’t feel bad if you’re just sitting down to file your taxes now. Follow these tips to make the process painless, and maybe even enjoyable (hello, refund!).
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Block out time on your calendar
OK, so you waited, but don’t put off filing too much longer: One of the biggest mistakes you can make when filing your taxes is missing the deadline. You must file your tax return—and pay anything you owe—by April 18, 2022.
And don’t expect that date to budge. “The past two years, we have seen the IRS push the traditional filing deadlines due to COVID-19,” Caruso says. “This year, there is no intent to push back the April 18 deadline, so it is important to get organized now.”
If you don’t file in time, you may owe a penalty. If you owe taxes, the penalty will be 5% of the unpaid amount for each month (or partial month) your return is late. If you’re getting a refund, there is no penalty.
If you already know that you won’t be able to meet that deadline, you can file for an extension with the IRS. Filing for an extension is free, and anyone can do it. However, the filing extension does not push back the payment deadline—you must pay what you owe by the original deadline.
If you know you’re going to owe taxes, and you can’t afford the payments, you should still file your return by the deadline. “The IRS offers many options to address tax problems, including payment plans over time to address any taxes that you owe,” says Caruso. “If you need help, reach out to an experienced tax controversy professional.”
Gather your paperwork
Getting all your paperwork in one place is one of the best ways to make sure your tax-filing goes smoothly.
So before you sit down with your tax software or accountant, gather the following:
W-2 form for salaried workers
1099 forms for self-employed and/or contract workers
For business expenses if you’re self-employed
For charitable donations
For medical expenses
For childcare expenses
1099 forms for any interest or dividends from investment and savings accounts
Letters or notices you received from the IRS
Be sure to pay special attention to anything you get from the IRS, says Caruso. If you haven’t already, open the letters and respond to it if necessary.
“Ignoring a notice can cause people to file incorrectly and slip into a possible tax controversy,” she says, referring to tax disputes that may have to be settled with the IRS. If you’re unsure of how to handle a request from the IRS, seek help from a tax professional.
“They will be able to navigate the process to ensure that any exposure or risk is minimized, and that you are held responsible for only the correct amount of tax owed,” says Caruso.
This year, it’s particularly important to be on the watch if you received a third stimulus check or advance child tax credits—the IRS is sending out notices with tax information about both.
Another key change to keep in mind: If you collected unemployment in the past year, it counts as taxable income.
Think about your deductions
Before you file, you’ll have to decide whether you’re going to take the standard deduction or itemize your deductions.
The standard deduction is the better—and simpler—choice for many people, but if you have a substantial amount of deductible expenses (state and local taxes, real estate taxes, mortgage interest, charitable gifts, medical expenses and more), itemizing could save you a bundle.
In fact, Caruso says that automatically taking the standard deduction is a very common tax-filing mistake.
To figure out the right choice for you, you’ll need to total up your deductions and compare that number to the standard deduction. In 2021, it’s $12,550 for single filers, $25,100 for married joint filers and $18,800 for head-of-household filers.
If your deduction total is higher than your standard deduction, you should probably itemize. If you do decide to itemize, you’ll likely need to upgrade your tax software or tap a professional for help.
Crack open your laptop
Once you’ve gathered your paperwork, if you’re doing your taxes yourself, get ready to file online.
Caruso says that you should avoid filing by mail if possible. “E-filing your tax returns and making payments electronically is the smartest route to avoid waiting many, many months for the IRS to process your return, apply payments and issue refunds,” she says.
So if you’re expecting a refund, opt to receive it via direct deposit to speed up the process. And whether you receive a refund or not, treat yourself for getting your taxes done and filed on time.