Tax season can cause a lot of headaches for many business owners — but fear not! This article will provide you with all the details you need so you will feel prepared as you tackle this year’s tax season. We’ll also answer the most frequently asked questions about the 2022 tax season and give you some bonus tips to help you get through this time of year with ease.
What is tax season?
Tax season refers to the period when most individuals are required to file and submit their tax returns. A tax season typically runs from January 1st to April 15th every year, though it can vary from year to year.
For example, the 2018 tax season started on January 28th, 2019, and ended on April 15th, 2019 (with a few exceptions for state holidays). Meanwhile, the 2020 tax filing season also started on January 28th but ended on July 15th, 2020, as the IRS decided to extend the deadline in response to the COVID-19 outbreak.
Any tax returns submitted after the end of tax season are subject to late penalty fees and interest charges. That’s why, if you require a later deadline for any reason, you should always contact the IRS beforehand to request a temporary delay.
During tax season, in addition to filing their own taxes, business owners must provide tax documents to their employees, contract laborers, and others, such as royalty earners, detailing the information needed to complete an individual’s tax returns.
2022 Tax Season FAQ
1. When will I be able to file my 2021 taxes?
According to the IRS, you can start filing and submitting your 2021 taxes on January 24th, 2022, at the earliest.
If your income was $73,000 or less in 2021, you can file your taxes for free through the Internal Revenue Service (IRS) Free File program.
2. What’s the deadline for filing my 2021 tax return with the IRS?
The deadline for most taxpayers to file federal taxes is April 18th, 2022 because this year, April 15th is Emancipation Day, a federal holiday.
Taxpayers in Maine and Massachusetts have until April 19th to file their returns as both states recognize Patriots’ Day.
3. Can I request an extension?
Yes. You can request an extension by filing Form 4868 by April 18th, 2022. Taxpayers who request an extension will have until October 17th, 2022, to file their 2021 tax returns.
Remember that a filing extension does not extend the time you have to pay the IRS. To avoid late penalties, you must pay an estimated amount of what you owe by April 18th (or April 19th, depending on where you live). An extension simply extends the time you have to complete your paperwork and finish your tax return.
4. When will I get my tax refund?
You can get your tax refund within 21 days if you file electronically, file correctly according to the IRS’s criteria, and choose direct deposit. The IRS strongly advises against filing your taxes on paper as the process takes longer, which may delay the time it takes to issue your refund.
5. How can I keep track of my tax refund?
Your refund status will appear on your account within 24 hours after the IRS receives your e-file return or four weeks after you’ve mailed a paper return. If your status is ‘received,’ the IRS has received your return and is processing it. If your status says ‘approved,’ it means your tax refund is on its way.
6. How should I enter my AGI when filing my 2021 tax return electronically if the IRS hasn’t processed my prior return?
When you file electronically, you will be asked about your previous year’s adjusted gross income, or AGI.
If your 2020 tax return hasn’t been completed yet, the IRS recommends entering $0 for your prior-year AGI. Enter $1 as your prior-year AGI if you used the non-filers tool to register for an advance child tax credit payment or the third stimulus payment last year.
Bonus tips to get through a tax season peacefully
Here are some useful tips that you can use to lower taxes, save money and avoid tax penalties.
1. Always be aware of the deadlines
Make sure you write down all of the important tax-related dates on a checklist and set reminders on your phone or Google calendar to get your taxes filed and submitted on time. Here is an example:
- January 24: First day you can file federal tax returns
- January 31: Deadline for employers to give employees Form W-2 for filing
- April 18: Last day to file your 2021 tax return, request an extension, and pay taxes owed
- April 19: Last day to file your 2021 tax return, request an extension, and pay taxes owed for Massachusetts and Maine residents
- October 17: Due date to file if you request and are granted an extension
If you file and pay late, you will be required to pay a late-filing penalty of 4.5% per month of the tax owed and a late-payment penalty of 0.5% per month of the tax due. The highest penalty for late filing is 22.5%, while the maximum penalty for late payment is 25%.
2. Have all records readily available
Make sure you have the necessary supporting documents and records for all claims on your tax return including, but not exclusive to: W-2s, 1099s, receipts, canceled checks, and others. We recommend having a well-organized system that keeps all important information together, and Shoeboxed can help you do just that. Shoeboxed is a software program that quickly and efficiently digitizes your receipts and documents. It automatically extracts and categorizes important data from your receipts, then stores them securely in the cloud. Most importantly, scanned documents from Shoeboxed are legibly accepted by the IRS. Get your records organized and stored with Shoeboxed to ensure you don’t have to pay any more tax than necessary!
Understanding the ins and outs of tax season will help you be better prepared for this important period of time. Keep all the important dates top of mind and have all your documents ready to make your tax returns process easier and more efficient.