10 tax questions (and answers): refunds, deadlines and more
Just days away from the deadline, millions of Americans still haven’t filed their 2021 taxes.
Admittedly, it has been a turbulent time. Not only is this the third tax season to take place during the COVID-19 pandemic, but it also comes as the IRS grapples with a mountain of paperwork. On top of that, the government has changed the policies associated with the child tax credit and the third stimulus check, which are making people even more eager than usual to receive their tax refunds.
Outmoded? Do not worry; We are here to help you. Below is a guide to some of the most frequently asked tax questions, along with answers and links to money stories on each topic.
What is the last day to file your taxes?
The federal tax deadline is usually April 15. But this year, April 15 falls on a holiday (Emancipation Day) in Washington, DC, so Tax Day has been moved to April 18 in 2022. This means that for most people, the last day to file taxes is Monday.
However, in Maine and Massachusetts, Monday is also a public holiday (Patriots Day), so for residents of these states, the tax deadline is April 19, aka Tuesday.
If you are also responsible for state taxes, note that your state’s tax deadline may be different than the federal one(s). Taxpayers in states like Delaware and Louisiana, among others, have until May to file their taxes.
Should I file my taxes online?
Yes, yes, a thousand times yes. Part of the reason the IRS is such a mess right now is that it’s trying to process millions of old paper returns — something employees have to do by hand using outdated technology.
To maximize your chances of having your 2021 tax return processed quickly, file online and choose to get your refund by direct deposit.
Can I declare my taxes for free?
Something like 7 out of 10 taxpayers are eligible to get free tax preparation through the IRS Free File program, which offers the most benefits to people earning $73,000 or less. Below this threshold, you can access guided tax preparation for free on branded sites such as TaxAct and TaxSlayer. Beyond that, you’re limited to using free fillable forms, which involves a bit more legwork.
Several tax preparers also offer their own free versions, but be sure to read the fine print to ensure the service of your choice is Actually free.
Need help with your 1040? You may be eligible for free tax assistance through the IRS’ Voluntary Tax Assistance or Tax Counseling for Seniors programs.
Should I claim the 2021 stimulus check on my taxes?
It depends. The third economic impact payment, or stimulus check, came out last spring. If you got the maximum amount – $1,400 per person – you don’t have to report it on your tax return.
But if you received less than that or didn’t receive a check at all, you’ll want to claim the salvage rebate credit. The government may owe you more money, especially if your income has dropped or you gained a dependent last year. If so, the IRS will either increase your refund or decrease your tax bill by the amount you are owed.
How do I claim the child tax credit?
Last year, the Biden administration expanded the child tax credit and ensured that families could receive half of the total value in six monthly installments. If you received these payments, you should claim the rest of the money on your 2021 tax return. Use the information on letter 6419, which the IRS should have sent you this winter, to do this.
If you chose not to receive these payments – or had a baby late last year – you must claim the full credit.
Should I declare crypto on my taxes?
Some 40 million Americans have tried their hand at crypto. If you’re one of them, you’ll probably need to tell the IRS if you’ve sold crypto for a profit or loss, earned income from mining, traded crypto, used crypto to pay for something, or more.
In fact, Form 1040 has a question that specifically asks taxpayers about crypto: “At any time in 2021, did you receive, sell, trade, or otherwise dispose of a financial interest in virtual currency?” Read our guide to crypto taxes to learn more.
Is there still time to reduce my taxable income?
Yes. If you made certain charitable donations before December 31, you may be eligible for a special deduction of up to $300.
Beyond that, you might consider contributing to an Individual Retirement Account, or IRA. There is a $6,000 limit for people under 50, and not everyone is eligible for a deduction for these contributions, but it can be a tactic to reduce your tax burden. You can technically contribute to your IRA for 2021 until Monday.
Where is my tax refund?
The IRS says most tax refunds are issued within 21 days.
If you’re eager to get your hands on that money, it’s possible to track your refund. The easiest way is to navigate to the IRS website, where its Where’s my refund? tool will allow you to check the status of your refund. But be prepared: you’ll need your social security number, tax status, and exact refund amount to use the program.
Also, where is my refund? only works if it’s been at least 24 hours since you filed your taxes online or four weeks since you mailed them in.
My tax refund is lower than I expected. What should I do?
Refunds are, on average, about $300 higher this year due to the aforementioned child tax credit and stimulus check situations.
But if you think your refund is downright wrong because it doesn’t match your tax return number, don’t spend it. Wait for the IRS to contact you.
If you are simply unhappy with the amount of your refund, you can adjust your withholding by submitting a new W-4 to your employer. The more you withhold throughout the year, the bigger your refund; the less you hold back, the smaller it is. Be careful, though — as nice as it is to get a fat check every spring, over-withholding is essentially the equivalent of giving Uncle Sam an interest-free loan.
What if I need more time to file my taxes?
File a request for an extension, which will extend the deadline for filing your tax return by six months. Although you still have to pay the IRS all the money you owe, you will have until October 17 to collect your documents.
More money :
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7 big tax changes that could affect your return – and the size of your refund
How to file taxes for free in 2022