When Can You Do Taxes

Top 5 Reasons To File Your Taxes Early

OVERVIEW

Every year, many taxpayers wait until the last minute to file their federal income tax returns. Despite this tendency, there are many reasons to file your taxes early. If you will receive a refund, you may want to submit your return as quickly as possible. Additionally, there are benefits to filing early for those taxpayers who have a balance due.

For information on the third coronavirus relief package, please visit our American Rescue Plan: What Does it Mean for You and a Third Stimulus Check blog post.

Can You Pay Estimated Taxes Anytime

Asked by: Hobart Braun

You can do this at any time during the year. Remember, the schedule set by the IRS is a series of deadlines. You can always make a payment before a set date, and you can cover your entire liability in one payment if you want to. You don’t have to divide up what you might owe into a series of four quarterly payments.

Can I Pay My Tax In Installments Over Time

If you find yourself owing more than you can afford, you should still file a return.

• Even if you don’t enclose a check for the balance due, sending in your return protects you from the late-filing penalty that otherwise would keep digging you deeper into a hole.
• Attach a Form 9465 Installment Agreement Request to your tax return asking the IRS to set up a monthly payment plan to pay off what you owe.

About 2.5 million taxpayers are paying off their bills under such an arrangement and recently the IRS made it easier to qualify. In the past, before the IRS would okay an installment plan, the agency demanded a look at your financesyour assets, liabilities, cash flow and so onso it could decide how much you could afford to pay.

• That’s no longer required in cases where the amount owed is under $10,000 and the proposed payment plan doesn’t stretch over more than three years.
• You can also now apply online for the installment agreement. More details are available on the IRS website

Don’t think the IRS is a patsy, though. You may be better off if you can borrow the money to pay your bill, rather than go on an installment plan which means, effectively, borrowing from the IRS.

Don’t Miss: Is The Solar Tax Credit Going Away

If I Sell My House Do I Pay Capital Gains Tax

Some homeowners will owe capital gains tax on selling a home if they dont qualify for an exclusion or special circumstance. Generally speaking, its easier to minimize or eliminate capital gains taxes on a primary home than a vacation or rental property.

Bear in mind that even if you qualify for a capital gains tax exclusion, you cant qualify for another exclusion for at least two years.

Graham Southorn Shares Inheritance Tax Tips

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

Hopes for the inheritance tax threshold to be increased were dashed this month as the Chancellor announced the threshold will be frozen at the current rate of £325,000 until 2028. As house valuations increase every year, more people will be forced to pay the 40 percent tax, however, there are four things Britons can do now to reduce future HMRC bills for loved ones.

Recommended Reading: How To Know If Irs Received My Taxes

If You Are Getting A Refund

This is one of the great little secrets about the federal tax law. If you have a refund coming from the IRSas about three out of four taxpayers do every yearthen there is no penalty for failing to file your tax return by the deadline, even if you don’t ask for an extension. However, this might not be the case for state taxes.

That’s not to say there aren’t very good reasons for filing on time. Even if you have a refund coming, consider the following:

• You can’t get your money back until you file, so you should file as soon as you can to get your money as soon as possible.
• The statute of limitations for the IRS to audit your return won’t start until you actually file your return. So, the sooner you file, the sooner the clock starts ticking.
• Some tax elections must be made by the due date, even if you have a refund coming. This applies to a very tiny percentage of taxpayers.

Income Requirements For Filing A Tax Return

Your first consideration is how much do I have to make to file taxes?. If your gross income for 2020 is above the thresholds for your age and filing status, you must file a federal tax return next year. See the table below.

In addition to federal taxes, you may also have to pay state taxes. Currently, seven states dont tax income at all, while two other states only tax investment income. You can find out if you owe state income taxes by going to your states revenue, finance or taxation offices website. The IRS also has a link to every states tax office.

Also Check: How Much Is Franchise Tax In Texas

Free File Available January 14

IRS Free File will open January 14 when participating providers will accept completed returns and hold them until they can be filed electronically with the IRS. Many commercial tax preparation software companies and tax professionals will also be accepting and preparing tax returns before January 24 to submit the returns when the IRS systems open.

The IRS strongly encourages people to file their tax returns electronically to minimize errors and for faster refunds as well having all the information they need to file an accurate return to avoid delays. The IRS’s Free File program allows taxpayers who made $73,000 or less in 2021 to file their taxes electronically for free using software provided by commercial tax filing companies. More information will be available on Free File later this week.

Personal Touch Vs Online Convenience

There are a lot of things to consider when deciding between using tax software and hiring an accountant. We’ll get into the details in the next section, but first, let’s outline the major differences.

When you hire an accountant or other tax professional, you get a person to do your taxes. That person can answer all your specific questions and tailor their knowledge to your needs. To get a feel for their strengths and abilities, you can email them and check with other people who’ve used them before.

With online tax software, you get the convenience of filing your taxes from anywhere at any time. You don’t have to worry about turning over your information to another person. Tax software tends to be cheaper than hiring a person as well, meaning you could save yourself some money.

The other big thing to consider is how complex your taxes are. If you have one job and need to file only one W-2 form, filing with an online program makes a lot of sense.

If you have multiple streams of income say, a full-time job, a rental property and a side hustle your taxes are going to be a lot more complicated. There are specific forms you need to file for rental income. And the deductions you can take for your side hustle and your rental property are going to vary. Hiring a professional to make sure all the details are covered may make the most sense.

You May Like: How To Cancel Tax Return

Can I File An Income Tax Return If I Dont Have Any Income

Filing a tax return is always important, so you have to make sure you do it before the deadline. But what is the procedure when you didnt have any income last year?

The good news is that you are not forced to file a return if you didnt get have any income in the last tax year. Every single year, there are some minimum income requirements imposed by the IRS they change annually depending on your tax status or inflation.

So, your requirements can change based on whether you file jointly, youre married but filing separately, youre single, and so on. So, a tax return is not mandatory if you have no income. Still, you may want to do it regardless, because there are some huge reasons for this.

Filing despite getting no income the last tax year will allow you to claim some refundable tax credits, which can then offer you some tax refund. This applies even if you dont have a job. Therefore, it is possible for you to qualify for the Additional Child Tax Credit or the Earned Income Tax Credit. They are both refundable tax credits.

Besides, you can also file if you earned very little income last year. This makes it possible for you to recover taxes that were withheld from the last time you paid. It is a scenario that occurs when you had a job, but only for a small part of the last year.

You will also have to file your taxes if you got any health care tax credits or subsidies for the last year. This allows you to receive them from now on too.

What Is A Tax Credit

There are many different tax credits that can come into play when you file your taxes, including the advance Child Tax Credit payments or Economic Impact Payments that we saw in 2021. Another example is the Earned Income Tax Credit , which is available to eligible low-income taxpayers. These tax credits and others can help you pay less in federal or state taxes throughout the year if you qualify.

Generally speaking, youll learn which tax credits you may be eligible for as you move through the steps to file your taxes online. This is especially true if you use tax software, since these programs ask you specific questions that ensure you receive every tax credit youre eligible for.

For example, TurboTax searches for 350 different tax deductions and credits as you file with the goal of helping you boost your refund. This type of help can be essential if youre in a situation where you arent sure which tax credits apply, such as having student loans or being in a low tax bracket.

Recommended Reading: How To Calculate Taxes On Stocks

What If Someone Else Can Claim You As A Dependent

Different income thresholds apply if someone else can claim you as a dependent, as well as the type of incomeearned or unearned. Your total income might be less than the standard deduction for your filing status. However, you will still need to file a tax return if your unearned income was $1,150 or more for the 2022 tax year. You’ll also need to file a tax return if your earned income is more than the standard deduction for an unclaimed single taxpayer, or $12,950 in 2022.

If You Made No Money You Probably Don’t Have To File Taxes

PeopleImages/Getty Images

Federal law doesnt require you to file a tax return if you didnt earn any money during the previous tax year. This might be the case even if you did earn some money but your earnings were less than the amount of that tax years standard deduction.

So why bother filing a tax return if theres no income left after you subtract the deduction? There are a few reasons you might want to do so, even if you dont technically have to. For starters, you could be leaving money on the table. Learn more about why you might want to file taxes.

Don’t Miss: How Does Refinancing Affect Taxes

How We Make Money

You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout lifes financial journey.

Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.

Were transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.

Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.

Rental Tax Changes For Landlords

The government often announces tax changes for landlords. While weve tried to provide an exhaustive list of everything you need to keep in mind for your tax return, exactly what you need to pay will depend on your particular circumstances and how things change in future.

Recommended Reading: How To Complete K1 Tax Form

Read Also: Can You Claim Home Improvements On Taxes

Learn Which Credits And Deductions You Can Take

Getting a sense of which can help you pull together the proper documentation. Here are a few to consider:

• Savers credit. If you are not a full-time student and are not being claimed as a dependent, you may be eligible for a tax credit if you contribute to a retirement plan. The amount of the credit depends on your filing status and adjusted gross income. For the 2022 tax year, if your filing status is single, you may be eligible if your adjusted gross income is $34,000 or less. If you are married and are filing jointly, you may be eligible if your adjusted gross income is $68,000 or less. However, these numbers are subject to change in future tax years.
• Student loan interest. You can deduct up to $2,500 in interest payments, depending on your modified adjusted gross income.
• Charitable deductions. Donating to your alma mater or a favorite charity? Generally, you can deduct qualified charitable donations if you itemize your taxes.
• Freelance expenses. If you are self-employed, you may be able to claim deductions for work-related expenses such as industry subscriptions and office supplies.

If you think you may qualify for additional credits or deductions, check the IRS website.

Tax Tips Tips For Investments

• A financial advisor can help you decide how best to handle losses in the fixed-income securities of your portfolio. SmartAssets free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If youre ready to find an advisor who can help you achieve your financial goals, get started now.
• Use our no-cost income tax calculator to see how much you will owe the federal government.

You May Like: Where To File California State Tax Return

Tracking Down A Missing W

The W-2 tax form spells out how much you made from your job and how much was withheld for federal income tax, Social Security and Medicare taxes and any state and local taxes. Your employer is required to send it to you each year, and you must file it with your taxes or include the information in your return if you file digitally. If youre an independent contractor, you will likely receive Form 1099-MISC instead.

If you dont receive a W-2 from your employer early in the new year, contact your employer to inquire. You may be able to get a second copy printed at work or mailed to you at home. If you have an online human resources or payroll portal, log in to it to see if your W-2 is available to download or print out. Some tax software can also automatically import W-2 forms from certain payroll processors, so this may be an option as well.

If none of this works, you can contact the IRS for help. The IRS will reach out to your employer on your behalf and remind the company of its obligation to send you the form.

Dont Miss: How To Protest Property Taxes In Harris County

Income Thresholds For Federal Taxes

The amount of the standard deduction varies by filing status, and its usually adjusted each year to keep up with inflation. Every taxpayer is entitled to subtract the standard deduction from their income, so theyre only taxed on what remains.

Below are the standard deductions for each filing status for tax years 2022 and 2023. You generally have to file a tax return if your income was more than the standard deduction for your filing status unless youre over the age of 65 or other rules apply.

While the IRS states that the standard deduction for married individuals who file separately is the same as those who are single, this doesnt necessarily determine whether or not you need to file. Thats because the IRS states that married individuals who file separately each need to file a return if they earn even just $5. This income threshold applies to married couples of all ages.

Taxpayers who are age 65 or older may have a little more leeway because theyre entitled to an extra standard deduction. For 2022, taxpayers who are 65 or older, or who are blind, are entitled to an additional $1,400 deduction. If the taxpayer is single and not a surviving spouse, that extra deduction goes up to $1,750.

For 2023, taxpayers who are 65 or older, or who are blind, are entitled to an additional $1,500 deduction. If the taxpayer is single and not a surviving spouse, that extra deduction goes up to $1,850.

Recommended Reading: How To Get Stimulus Check Without Filing Taxes