Counting down to Tax Day
The deadline for filing your 2022 taxes with the Internal Revenue Service (IRS) is less than a month away, and it is critical you file your tax returns on or before Tax Day to avoid late penalties. As this crucial deadline on April 18 approaches, I wanted to share some suggestions and resources to ensure you are well prepared for a smooth and timely filing process.
First, to avoid unnecessary delays, taxpayers should wait to file until they have received all proper tax documents. By creating an IRS Online Account can help taxpayers securely access information about their federal tax account, including payments, tax records and more. You can create your account at irs.gov/patments/your-online-account.
Filers should be aware of important changes to credits and deductions for tax year 2022 to help file an accurate return by April 18. Since there were no stimulus payments made in 2022, taxpayers should not expect additional payments in their 2023 tax refund. Additionally, some tax credits return to 2019 levels this tax year. This means that taxpayers will likely receive a smaller federal refund compared to the previous tax year.
Taxpayers should also be aware of their reporting and potential tax obligations on income from the gig economy and service industry, transactions from digital assets and foreign sources or holding certain foreign assets. Generally, income earned from the gig economy, activity where people earn income providing on-demand work, services or goods, such as selling goods online, driving a car for deliveries or renting out property, is taxable and must be reported to the IRS on tax returns. The IRS is requiring that calendar year 2022 income reporting threshold of $600.
Often, this type of income is through a digital platform like an app or website. Those who work in restaurants, salons, hotels and similar service industries often receive tips for the service they provide. Tips are usually taxable income, so it is important to understand details on how to report tips. Resources on this can be found at irs.gov/newsroom/tax-time-guide-irs-reminder-to-report-all-income-gig-economy-and-service-industry-digital-or-foreign-assets-and-sources.
Next, taxpayers whose Adjusted Gross Income (AGI) was $73,000 or less this year qualify for the IRS’ Free File program which offers a free federal return, guided preparation and even free tax preparation services for some states. Free Fillable Forms are also offered to taxpayers whose AGI was $73,000 or less this year. These are electronic federal tax forms, equivalent to a paper 1040 form. For this option, you should know how to prepare your own tax return using form instructions and IRS publications. If you qualify for these services, visit irs.gov/filing/free-file-do-your-federal-taxes-for-free for more information.
If you are receiving a refund, the best way to check the status of your refund is through the IRS’ “Where’s My Refund” tool at irs.gov/refunds, or by downloading the IRS2GO application available for Apple and Android products at irs.gov/help/irs2goapp. You can also call the IRS’ automated refund hotline at 800-829-1954 to check the status.
While the IRS issues most refunds within a month, it is possible a refund may take longer. If the IRS needs more information to process a tax return, the agency will contact the taxpayer by mail. Taxpayers should also consider the time it takes for the banks to post the refund to the taxpayer’s account. People waiting for a refund in the mail should plan for extra time. The fastest way to get a refund is by filing electronically and using direct deposit. Taxpayers who don’t have a bank account can find out how to open a bank account at a FDIC-Insured Bank at banks.data.fdic.gov/bankfind-sutie/bankfind or the National Credit Union Locator Tool at mapping.ncua.gov.
After you submit your tax return, if you are presented with a hefty bill that is difficult to pay, the IRS offers several options to help meet this obligation and avoid additional late penalty fines. The first option is to request an extension, which you can do at irs.gov/extension, by April 18. Note that this extension only applies to the filing deadline, not the payment deadline. Taxpayers who cannot pay the full amount of taxes they owe by April 18 should file and pay what they can. Making a payment, even a partial payment, will help limit penalty and interest charges. Additional tools for those who cannot pay in full include setting up a payment plan with the IRS. You can apply for this option at irs.gov/paymentplan.
Finally, the IRS YouTube channel provides short, information videos on a variety of tax related topics. To access these in English, visit www.youtube.com@irsvideos, in Spanish at www.youtube.com/@irsmultilingual and in American Sign Language at www.youtube.com/irsvideosASL. If you have any questions or need assistance in contacting the IRS, please call my Norman office at 405-329-6500. Happy filing!
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