This year could be more complicated than others when filing your taxes.
Tax time is intimidating to a lot of people. The dread of owing the IRS money looms on a lot of taxpayers minds. But, if you’re a middle-class worker (especially with dependents), tax time should be a time where you are eager to file your return and get a sweet refund check from Uncle Sam. Last year, 167 million tax returns were filed, with 122 returns entitled to a tax-refund. In 2021, the average refund was just under $2800. How soon will you get that refund this year? It will depend on several factors.
Taxpayers with income of less than $75,000 are projected to have, on average, no tax liability after deductions and credits when they file their returns this spring. They also will get money back from the IRS, according to recent estimates from the nonpartisan Joint Committee on Taxation.
While having a zero tax bill is not a new phenomenon, it may be more pronounced this year due to a variety of temporary tax code changes, said Elaine Maag, principal research associate in the Urban-Brookings Tax Policy Center.
The first thing you’ll need is your W-2s. A 2015 law requires employers to make sure that they have W-2’s out to employees by January 31st or risk facing fines from the IRS. WSI delivered electronic W-2’s to all of our associates on January 24th. Paper copies were mailed. The first day the IRS will start taking income tax returns in 2022 is January 26th , 17 days earlier than last year If you had other income sources from last year, like driving for Lyft or DoorDash, you’ll need a 1099 showing that income. Any receipts from health coverage, unemployment compensation, and a copy of last year’s tax return will also help you speed up your tax return.
Taxpayers should first focus on three tax credits: – the child tax credit, – the earned income tax credit, – and the dependent care tax credit. Each is refundable, meaning you get money back if the credit exceeds your taxes owed.
Filing your taxes from 2021 could be a bit more complicated this year, in part thanks to the Child Tax Credit and stimulus payments that most Americans received last year. President Joe Biden’s American Rescue Plan delivered $1,400 checks last March and the Child Tax Credit delivered $250 – $300 a month per child for six months. If parents want to
Before You File
The IRS advises to not start your tax return until you’re ready. Have all your W-2’s and any other necessary paperwork ready. Incomplete or inaccurate filings will delay your tax refund. For instance, errors like math problems or incorrectly stating how much you received from the advanced Child Tax Credit payments could get your tax return flagged, leading to delays of weeks or even months. Here’s an easy way to get your phone to scan paper documents for uploading.
The IRS is sending letters this month to taxpayers who received the third federal stimulus check in 2021, as well as the advanced Child Tax Credit payments. These letters will inform each taxpayer what they received through these programs in 2021 — they are important documents to hold onto because you’ll want to refer to those amounts when filling out your tax return.
File Electronically For Speedy Refund
Filing electronically and having your refund direct-deposited is the fastest way to get your money. Remember, the labor crunch is hitting everywhere—from restaurants all the way to the federal government. Some people who filed last year are still waiting on their returns to be processed. As of December 23, the agency had 6 million unprocessed individual returns. But tax experts say that you can get that refund in an average of 21 days if you e-file.
If you’re ready, you can use an online tax service to help you file. The IRS Free File Program is a public-private partnership between the IRS and many tax preparation and filing software industry leaders who provide their brand-name products for free. This service is for incomes of $73,000 a year or less. To partner with a tax-service provider, set this up through the IRS website. TurboTax left the IRS program last year, but you can still use them to file for free if your return is simple. (TurboTax defines “simple” as “Form 1040 only.”) These cover W-2 income, limited interest and dividend income, the standard deduction, the earned income and child tax credits, and student loan deduction.
Volunteer Income Tax Assistance (VITA) is a program that offers free tax help from IRS-certified volunteers. VITA services are available to people who generally earn $58,000 per year or less. They also offer free tax help to people with disabilities and people who speak limited English. Use the VITA site locator to find a site near you. Check with your local site for dates and times you can get help with your taxes. You can also check with your financial institution and ask if they offer a discount for tax preparation services.
None of this is professional tax advice; just some notes of how to be the most efficient and cost-conscious when filing your tax return, if you’re entitled to one. If you have significant tax questions, seek the help of a professional tax advisor. The deadline to file your tax return is April 18th, 2022.