Category: Uncategorized
-
Tax Day: Here’s what you need to know if you haven’t filed your return yet — and even if you have
Editor’s Note: This is an updated version of a story that originally ran on April 14, 2023.
New York
CNN
—
It’s April 18, the official deadline to file your federal and state income tax returns for 2022. (It is also, apparently, National Animal Crackers Day for those who celebrate.)
Whether you have already filed your tax return or still need to, the good news is this tax filing season has gone much more smoothly than the past three, which were hurt by the pandemic.
“This is the first tax season since 2019 where the IRS and the nation were on normal footing,” IRS Commissioner Danny Werfel said in a call with reporters.
For instance, Werfel noted that since January, thanks to an infusion of some new funding after years of budget cuts, IRS employees have been able to answer 87% of calls from filers with questions. Last year, they answered fewer than 15%. And the wait times on those phone calls dropped to just 4 minutes this filing season from 27 minutes last filing season.
The agency also added a roster of new online tools for filers, he added.
Those online tools may be especially helpful today if you are scrambling to get your return in before midnight. Or, if you’ve come to the realization that you need to file for an extension. Either way, here are some key things to know:
Not everyone has to file on April 18: If you live in a federally declared disaster area, have a business there — or have relevant tax documents stored by businesses in that area — it’s likely the IRS has already extended the filing and payment deadlines for you. Here is where you can find the specific extension dates for each disaster area.
Thanks to many rounds of extreme weather in recent months, for instance, tax filers in most of California — which accounts for 10% to 15% of all federal filers — have already been granted an extension until Oct. 16 to file and to pay, according to an IRS spokesperson.
If you’re in the armed forces and are currently or were recently stationed in a combat zone, the filing and payment deadlines for your 2022 taxes are most likely extended by 180 days. But your specific extended filing and payment deadlines will depend on the day you leave (or left) the combat zone. This IRS publication offers more detail.
Lastly, if you made little to no money last year (typically less than $12,950 for single filers and $25,900 for married couples), you may not be required to file a return. But you may want to anyway if you think you are eligible for a refund thanks to, for instance, refundable tax credits such as the Earned Income Tax Credit. (Use this IRS tool to gauge whether you are required to file this year.) You also are likely eligible to use IRS Free File (intended for those with adjusted gross income of $73,000 or less) so it won’t cost you to submit a return.
Your paycheck may not be your only source of income: If you had one full-time job you may think that is the only income you made and have to report. But that’s not necessarily so.
Other potentially taxable and reportable income sources include:
-
Interest on your savings
-
Investment income (e.g., dividends and capital gains)
-
Pay for part-time or seasonal work, or a side hustle
-
Unemployment income
-
Social Security benefits or distribution from a retirement account
-
Tips
-
Gambling winnings
-
Income from a rental property you own
Organize your tax documents: By now you should have received every tax document that third parties are required to send you (your employer, bank, brokerage, etc.).
If you don’t recall receiving a hard copy of a tax form in the mail, check your email and your online accounts — a document may have been sent to you electronically.
Here are some of the tax forms you may have received:
-
W-2 from your wage or salaried jobs
-
1099-B for capital gains and losses on your investments
-
1099-DIV from your brokerage or company where you own stock for dividends or other distributions from their investments
-
1099-INT for interest over $10 on your savings at a financial institution
-
1099-NEC from your clients, if you worked as a contractor
-
1099-K for payments for goods and services through third-party platforms like Venmo, CashApp or Etsy. The 1099-K is required if you made more than $20,000 in over 200 transactions during the year. (Next year the reporting threshold drops to $600.) But even if you didn’t get a 1099-K you still must report all the income that you made over third-party platforms in 2022.
-
1099-Rs for distributions over $10 that you received for a pension, annuity, retirement account, profit-sharing plan or insurance contract
-
SSA-1099 or SSA-1042S for Social Security benefits received.
“Be aware that there’s no form for some taxable income, like proceeds from renting out your vacation property, meaning you’re responsible for reporting it on your own,” according to the Illinois CPA Society.
One very last-minute way to reduce your 2022 tax bill: If you’re eligible to make a tax-deductible contribution to an IRA and haven’t done so for last year, you have until April 18 to contribute up to $6,000 ($7,000 if you’re 50 or older). That will reduce your tax bill and augment your retirement savings.
Proofread your return before submitting it: Do this whether you’re using tax software or working with a professional tax preparer.
Little mistakes and oversights delay the processing of your return (and the issuance of your refund if you’re owed one). You want to avoid things like having a typo in your name, birth date, Social Security number or direct deposit number; choosing the wrong filing status (e.g., married vs single); making a simple math error; or leaving a required field blank.
What to do if you can’t file by April 18: If you’re not able to file on time, fill out Form 4868 electronically or on paper and send it in no later than today. You will be granted an automatic six-month extension to file.
Note, however, that an extension to file is not an extension to pay. You will be charged interest (currently running at 7%) and a penalty on any amount you still owe for 2022 but haven’t paid by April 18.
So if you suspect you still owe tax — perhaps you had some income outside of your job for which tax wasn’t withheld or you had a big capital gain last year — approximate how much more you owe and send that money to the IRS by the end of today.
You can choose to do so by mail, attaching a check to your extension request form. Make sure your envelope is postmarked no later than April 18.
Or the more efficient route is pay what you owe electronically at IRS.gov, said CPA Damien Martin, a tax partner at EY. If you do that, the IRS notes you will not have to file a Form 4868. “The IRS will automatically process an extension of time to file,” the agency notes in its instructions.
If you opt to electronically pay directly from your bank account, which is free, select “extension” and then “tax year 2022” when given the option.
You can also pay by credit or debit card, but you will be charged a processing fee. Doing so, though, may become much more costly than just a fee if you charge your tax payment but don’t pay your credit card bill off in full every month, since you likely pay a high interest rate on outstanding balances.
If you can’t pay what you owe in full, the IRS does have some payment plan options. But it might be smart to first consult with a certified public accountant or a tax preparer who is an enrolled agent to make sure you are making the best choice for your circumstance.
If you still owe income taxes to your state, remember that you may need to go through a similar exercise of filing for an extension and making a payment to your state’s revenue department, Martin said.
Use this interactive tax assistant for basic questions you may have: The IRS provides an “interactive tax assistant” that can help you answer more than 50 basic questions pertaining to your individual circumstance on income, deductions, credits and other technical questions.
If you’ve already filed your return, you’re probably glad to have it in the rear view mirror. But you may still have a few questions about what’s ahead.
What about my refund? If you are due a refund, the IRS typically sends it within 21 days of receiving your return. When yours does arrive, it may be smaller than last year, even if your financial life didn’t change much. That’s because a number of Covid-related tax breaks expired.
So far, the average refund paid was $2,878 for the week ending April 7, down from $3,175 at the same point in last year’s filing season.
Will I be audited?: The reasons and methods for auditing a taxpayer can vary — and many audits result in “no change,” meaning you don’t end up owing anything more to the IRS. But one thing is common for the vast majority of US tax filers: Audit rates are exceedingly low.
For filers reporting incomes between $50,000 and $200,000, only 0.1% of them were audited in 2020, according to the latest data from the IRS. Even for very high income filers, audit rates were quite low: Just 0.4% for those reporting income of between $1 million and $5 million; 0.7% for those with income between $5 million and $10 million; and 2.4% for returns with income over $10 million.
Looking ahead, the IRS commissioner noted in a press call that the agency will be using money from the Inflation Reduction Act to bolster its compliance efforts to focus more on auditing high-income individuals — defined as making $400,000 or more. As for filers with income below that level, he said he did not anticipate any change in the likelihood they would be audited.
-
-
Jake Gyllenhaal and Jamie Lee Curtis spent the Covid-19 lockdown together
CNN
—
It’s sourdough bread and handstands for Jake Gyllenhaal and Jamie Lee Curtis.
The two stars are talking about the time they spent together during the Covid-19 pandemic, telling People that the actor, who is Lee’s godson, and his girlfriend Jeanne Cadieu, lived in the house next door that Curtis owns. Curtis, who won best supporting actress Oscar at lthe 2023 Academy Awards, is friends with Gyllenhaal’s parents, director Stephen Gyllenhaal and screenwriter Naomi Foner.
“We’ve just gotten to know each other,” Lee said while at the premiere of Gyllenhaal’s new thriller “The Covenant.” “He also lived with me during Covid for almost a year. He and Jeanne lived in the house next door that I have. And so there was also that. For a minute.”
Lee revealed that Gyllenhaal, like a lot of people, turned to bread baking during the time, and would act and sing and do handstands for the small group.
“He made a lot of sourdough bread, a lot,” Lee said. “So singing, acting, sourdough. And he did that test where you do a handstand against the wall and take your shirt off and put it back on.”
Gyllenhaal added the bread baking has stuck.
“I am still eating sourdough,” he said. “Yes. I haven’t stopped. Even though we’re out of the pandemic, I am still making sourdough.”
Gyllenhaal’s new film is a military thriller directed by Guy Ritchie. It also stars Alexander Ludwig, Antony Starr, Bobby Schofield and Jonny Lee Miller.