More Tax Planning Tips
Filing and refund dates aren’t the only deadlines that taxpayers have to concern themselves with. Certain payments and reporting requirements are sprinkled over the calendar year, and missing any of them could cause a headache. Here are a few other deadlines you may want to keep in mind:
- Sole proprietors and independent contractors who aren’t subject to tax withholding by an employer should make quarterly estimated payments on January 15, April 15, June 15, and Sept. 15 of each year. The date in January 2022 is actually Jan. 18, and its payment is especially important because it’s the last payment for the 2021 tax year.
- Employees who earn more than $20 in tips in the month of December 2021 should report them to their employers on Form 4070 by Jan. 10, 2022, and every month going forward.
- You can make 2021 IRA contributions until April 18, 2022.
Tax Filing Deadlines For Final Tax Returns
If you are the legal representative of a deceased person, you are in charge of ensuring their final tax return is submitted to the CRA.
- If the individual passed away between January 1 and October 31 of the tax year, their return is due May 2.
- If they passed away between November 1 and December 31, their return is due six months after the date of their death.
Again, if the deceased person or their spouse or common-law partner is self-employed, the CRA extends the due date to June 15, but it still begins assessing interest as of April 30.
You Missed The Tax Deadline Now What Should You Do
If you didn’t file your tax return for 2021, it’s now delinquent. Learn how to resolve your late taxes.
Peter Butler
How To and Money writer
I’m a writer/editor for CNET How-To and Money, living in South Berkeley, CA with two kids and two cats. I enjoy a variety of games and sports — particularly poker, ping-pong, disc golf, basketball, baseball, puzzles and independent video games.
Yesterday was the federal tax deadline for almost everyone in the US. If you didn’telectronically file your tax return or have a paper return postmarked by midnight April 18, your taxes are now technically late.
There are plenty of reasons why people might not be able to finish and file their tax returns by the deadline — missing tax info, medical emergencies, family troubles, unexpected travel you know, life.
Yes, you should have filed a tax extension. But what to do now that your tax return is late? Whether you owe taxes or are expecting a tax refund, the answer is simple — complete and file your 2021 tax return as soon as possible.
However, if you owe money, your situation becomes more urgent. The longer you wait to file your tax return and show the IRS you intend to pay what you owe, the more penalties and interest may pile up.
Read Also: When To Expect Tax Refund
A File Taxes Online With Tax Software
If youve used tax software in the past, you already know how to prepare and file taxes online. Many major tax software providers offer access to human preparers, too.
TurboTax, H& R Block, TaxAct and TaxSlayer, for example, all offer software packages or support options that come with on-demand, on-screen or online access to human tax pros who can answer questions, review your return and even file taxes online for you.
The IRS Free File program can get you free online tax preparation software from several tax-prep companies, including major brands. You must have $73,000 or less of adjusted gross income to qualify.
» MORE:See our picks for the year’s best tax filing software
How Income Tax Works
Federal and Ontario income taxes are paid to the Canada Revenue Agency , which is part of the federal government.
Income tax is commonly taken off your pay by your employer, or off your pension, and sent directly to the CRA. You may also have to calculate the tax you owe and send a payment to the CRA.
Each year, you should file a tax return with the CRA to:
- report the income you’ve made
- ensure you’ve paid the correct amount of income tax
- access tax credits and benefits
Learn more about how much tax you should pay on each portion of your income.
Read Also: Are There State Taxes In Florida
If You Cant Pay In Full By 31 January 2023
If you already know that you will not be able to pay in full by 31 January 2022, you can set up a payment plan online without speaking to anyone by using the self-serve Time to Pay facility, provided you meet criteria to use this service.
Find out what to do if you cannot pay your tax bill on time.
If you have an outstanding amount after the payment due date, interest will accrue on that amount until it is paid in full, even if you are in a payment plan.
Self-serve Time to Pay allows you to choose the length of the agreement and works out the monthly payments. We recommend you repay any debt as quickly as possible, while making sure the payments are affordable.
Awaiting Processing Of Previous Tax Returns People Can Still File 2021 Returns
Rettig noted that IRS employees continue to work hard on critical areas affected by the pandemic, including processing of tax returns from last year and record levels of phone calls coming in.
“In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs. This is frustrating for taxpayers, for IRS employees and for me,” Rettig said. “IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us. And we will continue to look for ways to improve. We want to deliver as much as possible while also protecting the health and safety of our employees and taxpayers. Additional resources are essential to helping our employees do more in 2022 and beyond.”
The IRS continues to reduce the inventory of prior-year individual tax returns that have not been fully processed. As of December 3, 2021, the IRS has processed nearly 169 million tax returns. All paper and electronic individual 2020 refund returns received prior to April 2021 have been processed if the return had no errors or did not require further review.
Taxpayers generally will not need to wait for their 2020 return to be fully processed to file their 2021 tax returns and can file when they are ready.
Also Check: Do You Pay Taxes On Dividends Reinvested
How Late Can You File
The IRS prefers that you file all back tax returns for years you have not yet filed. That said, the IRS usually only requires you to file the last six years of tax returns to be considered in good standing. Even so, the IRS can go back more than six years in certain instances.
Unfortunately, there is a limit on how far back you can file a tax return to claim tax refunds and tax credits. This IRS only allows you to claim refunds and tax credits within three years of the tax return’s original due date. By not filing within three years of the due date, you might end up missing out on a tax refund because you can no longer claim the lucrative tax credits or any excess withholding from your paycheck.
If You Can’t Pay Your Bill
If you’re unable to cover your tax bill, you may have options, such as a long-term payment plan through the IRS known as an installment agreement. But you must be up to date on all returns, and can’t owe more than $50,000 including tax, penalties and interest.
Other options may include an offer in compromise for taxpayers with financial difficulties, allowing you to settle with the IRS for less than you owe, or “currently not collectible” status, where the agency temporarily stops trying to collect. But you must meet specific criteria for each one to qualify.
Recommended Reading: How Long Does It Take To Get Your Taxes
Does The Irs Ever Negotiate The Amount Owed
Under certain circumstances, the IRS is authorized to resolve a tax liability by accepting less than full payment. An “offer in compromise” is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax debt. There are three circumstances under which the IRS is authorized to compromise:
Form 656: Offer in Compromise Package should be completed to file an Offer in Compromise with the IRS. Included with the Form 656 package are Form 433-A, Collection Information Statement for Wage Earners & Self-Employed Individuals and Form 433-B, Collection Information Statement for Businesses.
- You may need to complete the appropriate Form 433 and should be prepared to provide other documentation and explanations as they are requested.
- Various options are available for accepted Offers in Compromise requests, such as a reduced total payment and scheduled monthly payments.
- Defaulting on an accepted offer in compromise can result in the IRS filing suit against you and reinstatement of the original tax debt, plus interest and penalties.
When Can I File My Taxes
Each year, the IRS issues a statement in early January with the first day to file taxes.
Typically, the official date when you can file taxes falls in mid to late January.
The IRS announced it will start processing tax returns Feb. 12. Worried about waiting weeks for your refund? We can do your taxes now and when you file at Block, you could get a Refund Advance up to $3,500 today. No waiting on the IRS. No loan fees and 0% interest.
Read Also: Do You Have To Pay To File Taxes
Why You Should File Back Taxes
Filing back tax returns could help you do one or more of the following:
1. Claim a refund
One practical reason to file a back tax return is to see if the IRS owes you a tax refund. While many have federal income taxes withheld from their paychecks, sometimes too much money is withheld. In these cases, filing a tax return could result in a tax refund that puts money in your bank account.
2. Stop late filing and payment penalties and interest
Filing a tax return on time is important to avoid or minimize penalties, even if you can’t pay the balance you owe. If you don’t file your return, you may have to pay an additional 5% of the unpaid tax you were required to report for each month your tax return is late, up to five months. Minimum penalty limits can also apply.
The IRS assesses another penalty for a failure to pay your taxes owed. If you do file on time, but you can’t pay what you owe in full by the due date, you’ll be charged an additional 0.5% of the amount of the tax not paid on time for each month or part of a month you are late. These fees will accrue until your balance is paid in full or the penalty reaches 25% of your tax, whichever comes first.
The IRS also charges interest on overdue taxes. Unlike penalties, interest does not stop accruing like the failure to file and failure to pay penalties.
3. Have tax returns for loan applications
4. Pay Social Security taxes to qualify for benefits
B Hire And Work With A Tax Preparer
While it’s never been easier to do your own taxes using software, as your financial life gets more complex you might wonder if you’re missing something and should get someone to prepare and help file your taxes. If you have a business or a healthy side gig, or you just want help understanding all of the forms, you might seek out a professional’s guidance.
If you don’t want to meet in person with a tax preparer, theres a way to file taxes without leaving the house. A secure portal lets you share documents electronically with a tax preparer. Typically, the preparer will email you a link to the portal, youll set up a password and then you can upload pictures or PDFs of your tax documents.
» Find a local tax preparer for free:See who’s available to help with your taxes in your area
Read Also: How Much Taxes Do I Have To Pay For Unemployment
Due Dates For Installment Payments
If you make installment payments throughout the year so that you can avoid a large bill at tax time, you have four due dates throughout the year. Whether you are self-employed or employed by someone else, you must submit your installment payments by March 15, June 15, September 15, and December 15 of each year.
What If I’m Late And I Am Expecting A Tax Refund For 2021
If you’re expecting money back from the IRS from your 2021 tax return, there are no penalties for filing late. In fact, you have three years to file your 2021 tax return before the IRS turns your tax refund over to the Treasury and your money is gone forever.
Your tax refund might be slightly delayed by filing late, but you should still expect to receive your money in four to six weeks.
You could be making good use of the money the IRS owes you, and the longer you wait to file your taxes, the more you lose out. Whether you use your tax refund to pay down a , start an emergency fund, make investments or even just treat yourself to a nice dinner or vacation , you want your money as soon as possible. Letting the IRS keep your tax refund longer only deprives you of possible interest and spending power.
Read Also: How Do You Find Your Federal Tax Id Number
What I Still Need To Pay The Irs
That’s right getting an extension to file your tax return doesn’t give you an extension on paying what you owe the government.
The IRS expects people to make an effort to pay what they owe, Betterment’s Bronnenkant said. That may be difficult for people who haven’t yet filled out their tax returns, but it’s best to make a good-faith estimate.
“If your prior year is a good barometer for your current year, start with that as a way to come up with some sort of reasonable estimate,” Bronnenkant said. “Don’t let perfect be the enemy of good enough.”
For instance, if you estimate that you owe $10,000 but end up actually owing $11,000, you’ll be charged an underpayment penalty. But it will be less painful to face an underpayment penalty for $1,000 rather than the entire $11,000 that you owe, Bronnenkant noted.
Auto Registration For Personal Income Tax
If you are deemed as required to file a tax return, this year SARS will automatically register you for personal income tax based on reliable data from third party sources.
Taxpayers who meet the below criteria will be considered for auto registration:
- South African citizens and permanent residents
- Tax deducted by your employer and/or IT3 data sources indicate that you are liable to submit a tax return
Once the IRP5 and IT3 certificates have been evaluated and you are deemed as required to file a tax return, SARS will automatically register you for Personal Income Tax and issue an ITA150.
Also Check: Does Donating To Charity Help With Taxes
What Will Happen If I Dont File An Income Tax Return On Or Before The Due Date
Following are the consequences if you do not file your Income Tax Return on or before the due date:-non-filing of ITR. Some of them are:
- You can not carry forward the losses from your business.
- Lose Interest on refunds.
- Late filing fee u/s 234F up to Rs. 5000 depending upon taxable income and date of return filing will be levied.
- You may receive the Notice from the Income Tax Department.
What Will Happen When I Have Taxable Income But Do Not File My Income Tax Return
Having taxable income and not filing income tax return can put you in trouble with the Income Tax Authorities. Be prepared to welcome notices from Income Tax Department along with fines and penalties. The consequences of non-filing of return are:
- Late filing Fee u/s 234F shall be levied if the return is not filed on or before the due date. The quantum of fees shall vary according to the amount of your income and return filing date. The maximum fee levied is Rs. 5000/-.
- Notice u/s 142 which requires you to file your return if you have not filed it before the due date. if you fail to comply with this notice then it may result in: Best Judgement Assessment u/s 144 and/or Penalty of Rs. 10,000 u/s 271 and/or Imprisonment with or without fine u/s 276D.
- A penalty of minimum 100% to a maximum of 300% of the amount of tax for concealment of income u/s 271.
- Interest u/s 234A keeps on mounting at the rate of 1% per month/ part of the month till the time you file your return. Also, you’d be required to pay interest u/s 234B and 234C, both at the rate of 1% per month/ part of the month if you’ve not complied with the advance tax provisions at the time of late filing of return.
- If you have losses which you want to be carried forward, you can not carry forward your loss if you do not file an Income Tax Return or file after the due date.
Read Also: How To Avoid Capital Gains Tax On Home Sale
