Do I Have To Pay Taxes On Unemployment Income
Yes, unemployment benefits received in 2021 are taxable.
The American Rescue Plan signed into law on March 11, 2021, allowed people with incomes of up to $150,000 to waive federal taxes on the first $10,200 of unemployment benefits collected in 2020. However, that exclusion does not apply to unemployment benefits received in 2021.
If you’re currently or have been recently unemployed and can’t afford to pay your taxes, make sure to file a return anyway there is a penalty for filing late or neglecting to file at all. Then, you can request an installment agreement to help you pay taxes over time. You can do this online through the IRS website, by filling out Form 9465, or by for help.
Reasons For Filing For A Tax Extension
There is no particular reason for a taxpayer to file for a tax extension. The IRS allows all taxpayers to file a tax extension. So, you arent required to state a reason as to why youre filing a tax extension. The most common reason why taxpayers choose to file for a tax extension is not about the taxes owed.
All taxpayers are required to pay whether or not they file a tax extension. That said, filing a tax extension due to unpaid taxes isnt going to change anything. You can file a tax extension if you havent received information returns you need to file a federal income tax return. This is mostly why thousands of taxpayers file for a tax extension.
If you know the exact amount of income earned, you may want to report this income yourself. That still poses a risk of computing adjusted gross income incorrectly.
An outcome of this would be filing an amended tax return to correct adjusted gross income, thus, the taxes owed. If there is a risk of you filing an amended tax return, we suggest waiting for the information returns. As soon as the April 15 deadline comes closer, simply, request an extension and get six more months to file your 2021 federal income tax return. Read more on tax extensions below.
Who Do I Contact If I Have Questions
The IRS said it plans to extend its phone hours on April 15 from 8 a.m. to 7 p.m. and on April 18 from 7:30 a.m. to 7 p.m. to help answer residents’ questions.
For the most up-to-date information, forms, schedules, and instructions for the 2022 tax season, residents can check tax.illinois.gov.
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Collect Your Income Documents
Your employer has until Jan. 31, 2022, to send you your W-2 form reporting your 2021 earnings. Most 1099 forms must be sent to independent contractors by this date as well.
Reach out to your employer and request a copy or a duplicate copy if you haven’t received your W-2 form. Your W-2 may also have been posted online, if you and your employer agreed to that method. As a last resort, you can call the IRS for assistance at 800-829-1040.
You can file IRS Form 4852, a W-2 substitute, if the tax-filing deadline is looming and you still don’t have your W-2, but this can be a bit of a headache. You’ll have to accurately calculate your earnings and withholding amount based on your final pay stub for the year, so you might want to reach out to a tax professional if you find yourself in this situation.
The Irs Recommends Filing Your Taxes Early
According to the IRS, you should file your taxes early so you can avoid delays when waiting for your tax refund. This means youll get your tax refund the fastest way possible!
With an estimated 153 million tax returns expected to be filed, 80% of which will be submitted through online tax software, its always better to start as soon as possible and avoid any system downtime or painful delays.
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Income Tax Return Filing Dates
- 1 July 2022 to 24 October 2022
- Taxpayers who file online
- Taxpayers who cannot file online can do so at a SARS branch
If you are being auto-assessed, see all the info you need to know on our How does the Auto-Assessment work webpage. If you are not in the auto-assessment group and need to submit a return, see our info for provisional and non-provisional taxpayers on the 2022 Tax Filing Season media release.
Does My Stimulus Payment Count As Income
The IRS stated in May 2020 that the economic impact payments provided to Americans under the Coronavirus Aid, Relief, and Economic Security Act and further legislation are not taxable income. There were two stimulus payments administered in 2020, and one in 2021.
You dont have to give any portion of that money back to the government, and it wont reduce your refund if you have one coming to you. Stimulus payments aren’t considered income for other purposes, either, such as eligibility for government benefits or assistance.
Many state governments, including New Jersey and Massachusetts, have indicated that theyre not taxing these stimulus payments, either. You most likely wont have to report the payment you received on your state tax return, but check your states website or confer with a local tax professional to be sure.
There was a third stimulus payment sent out to eligible recipients starting in March 2021. This amount will not be taxed. However, those who did not qualify or did not receive the full amount may be eligible for the Recovery Rebate Credit based on their 2021 income and tax situation. If you’re eligible for a credit and don’t owe taxes this year, your credit will provide a tax refund.
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Personal Tax Changes And Tax Filing Deadline
The tax filing deadline in Canada in 2022 is on May 2, 2022.
2021 was another extraordinary year. Unlike previous years where you probably only focused on getting your T4 slip and that was it, your 2021 tax return filing may look a bit different.
Canadians who received COVID-19 financial benefits are required to report the income on their tax return.
For example, you must report income received from the Canada Recovery Benefit , Canada Recovery Sickness Benefit , and Canada Recovery Caregiving Benefit . Recipients of these benefits will get a T4A slip from CRA.
The tax was withheld at source for these three benefits, however, depending on how much you earn from other sources, you may still owe taxes or receive a refund.
For the 2022 tax year, the following updates are applicable:
RRSP Contribution Limit: The RRSP annual limit for 2022 is increasing to $29,210 from the previous limit of $27,830 in 2021. You can still make RRSP contributions for the 2021 tax year during the RRSP season that ends on March 1, 2022.
Basic Personal Amount: The federal basic personal amount in 2022 is up to $14,398 if your income is $155,625 or less. A clawback of the personal amount applies to higher taxable incomes and is $12,719 if you earn $221,708 or more.
TFSA Contribution Limit: The annual TFSA limit for 2022 is unchanged at $6,000. If you have been eligible to contribute to a TFSA since it was implemented in 2009, your total contribution room is now $81,500 .
- Up to $50,197: 15%
What Happens If You Can’t Afford To Pay Your Taxes When You File
If you can’t pay your taxes when you file your taxes, you might get hit with a Failure to Pay Penalty.
According to the IRS, “The Failure to Pay Penalty applies if you dont pay the tax you report on your tax return by the due date or approved extended due date. The penalty you must pay is a percentage of the taxes you didnt pay.
However, if you aren’t able to pay your taxes on the day they are due, you may qualify for an online payment plan that allows you to pay off an outstanding balance over time.
Once your online application is complete, you’ll receive immediate notification of whether your payment plan has been approved.
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Those payment plans can include:
- Short-term payment plan The payment period is 120 days or less and the total amount owed is less than $100,000 in combined tax, penalties and interest.
- Long-term payment plan The payment period is longer than 120 days, paid in monthly payments, and the amount owed is less than $50,000 in combined tax, penalties and interest.
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How Do I File Taxes
You can file online yourself, potentially for free, or visit a tax professional.
If your adjusted gross income was less than $72,000 in 2021, you might qualify to file your federal return, and maybe your state return, at no cost through one of the IRS partners, regardless of how complicated your tax situation is. Also, most active duty military qualify for free filing. Check out your options here.
If your income exceeds $72,000, or you’re not interested in the platforms offered in partnership with the IRS, check out our list of the best tax software to use this year.
After filing out the required forms, your tax preparer will calculate whether you owe additional income tax or you’re getting a refund. If you don’t pay what you owe by April 18 , penalties may apply.
Most Important Tax Dates For Business Owners
The following are the most important tax dates for businesses that use a calendar year as their tax year. If your business uses a fiscal year, taxes are due on the 15th day of the third or fourth month after the business tax year, depending on what type of business it is.
The dates for corporations are different from the dates for partnerships and S corporations because the partnership and S corporation income passes through to the owners of the business. Corporations, on the other hand, pay the taxes themselves.
Heres an at-a-glance look at the most important tax dates for business owners in 2021:
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2021 Tax Dates for Businesses |
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Provide income statements to all employees, contractors and others who received payments from you, such as individuals you paid interest to. These statements are reported on Form W-2 or a range of Form 1099. |
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Provide Form 1099s for all investment transactions, barter transactions, real estate transactions, substitute payments and proceeds paid to an attorney to the recipients of such payments. |
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We Have Made It Easier For You
We continue to make it easier for you to comply. Starting July 2022, we will be assessing a significant number of taxpayers automatically.
We auto-assess based on the data we receive from employers, financial institutions, medical schemes, retirement annuity fund administrators and other 3rd party data providers. If you have not yet received your IRP5/IT3s and other tax certificates like medical certificate, retirement annuity fund certificate and other 3rd party data that are relevant in determining your tax obligations, you should immediately approach your employer or medical scheme or retirement annuity fund or other 3rd party data providers to make sure that they have complied with their submission requirements.
How To File Your Taxes In 2022
There are so many ways to go about filing your taxes in 2022, depending on your circumstances or preferences. Some of the options available include:
Online Tax Software: There are many brands of tax software you can use for filing your taxes. Depending on the level of support you need, you can choose the free or paid versions.
Examples of tax software in Canada include Wealthsimple Tax , TurboTax Online, H& R Block Tax, Studio Tax, GenuTax, AdvTax, uFile, and CloudTax.
We have reviewed some of these options and you can learn more about what they offer using the links below:
Tax software simplifies the filing process since you can connect to an existing CRA My Account and use the auto-fill my return feature to automatically populate a good portion of your information. This automated process also helps to reduce the likelihood of errors occurring.
Using online software means that you can send your tax return directly to CRA through NETFILE, and get your refund back in as little as 8 business days. Additionally, you will have your tax information for previous years stored online and easily accessible for reference in the future.
Paper Return via Mail: Some people prefer to do their taxes the old-fashioned way. In some years, the CRA mails out tax forms to paper filers to hasten the process. If you prefer to file a paper return and did not receive them in the mail, you can order a paper copy or starting in January 2022.
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File Anytime Between Jan 24 And The April 18 Deadline
The filing deadline to submit your 2021 tax return or an extension to file, is Monday, April 18, 2022, for most taxpayers. The due date in 2022 is April 18, instead of April 15 because of the Emancipation Day holiday in the District of Columbia. Taxpayers in Maine and Massachusetts have until April 19, 2022, to file their returns due to the Patriots’ Day holiday in those states.
Keep in mind that April 18 is the last day to file or request an extension. The earlier you file the sooner you will receive any refund you are due. If you are waiting for your 2020 return to be processed, you don’t have to wait to file your 2021 return, according to the IRS.
If you request an extension to file by April 18 , you have until Monday, October 17, 2022, to submit your 2021 tax return. You must pay your estimated taxes, however, by the regular tax filing deadline of April 18 .
Possible Refund Delays Because Of New Laws
One primary reason for the expected refund delays is a new law that forces the IRS to withhold refunds when the EITC, Earned Income Tax Credit, and ACTC, Additional Child Tax Credit, have been claimed on a persons taxes.
The 2015 act was passed to allow the IRS to combat fraud and issue correct refunds. Once your refund has been approved and cleared for payment, the funds will be processed.
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Federal Tax Return Filing Requirements :
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Filing Status and Age at End of 2021 |
Income Required to File 2021 Return |
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Single Under 65 |
If you receive monthly child tax credit payments last year, you’ll have to reconcile those payments with the total credit that you’re actually entitled to claim.
What Do I Do About Missing Tax Forms
If you don’t receive your income forms, you should first contact the employer and request a copy or ask that it be re-sent. If that doesn’t work, you can then contact the IRS at 1-800-829-1040 . You’ll need to provide the following information:
- Name, address, Social Security number, and phone number
- Your employer’s name, address, and phone number
- Dates you worked for your employer
- An estimate of your paid wages and federal income tax withheld during 2021
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No Matter How You File Block Has Your Back
There Are Several Important Dates Taxpayers Should Keep In Mind For This Year’s Filing Season:
- IRS Free File opens. Taxpayers can begin filing returns through Free File partners tax returns will be transmitted to the IRS starting Feb. 12. Tax software companies also are accepting tax filings in advance.
- Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people including the option to use prior-year income to qualify.
- IRS begins 2021 tax season. Individual tax returns begin being accepted and processing begins.
- Projected date for the IRS.gov Where’s My Refund tool being updated for those claiming EITC and ACTC, also referred to as PATH Act returns.
- First week of March. Tax refunds begin reaching those claiming EITC and ACTC for those who file electronically with direct deposit and there are no issues with their tax returns.
- Deadline for filing 2020 tax returns.
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