When Do You Need To File Taxes 2021

Do You Need To File A Tax Return

When you start a new job, you typically fill out a W-4 form. This form is used by employers and the IRS to estimate your withholding from each paycheck.

When you set up your withholding when first employed, the way you answer key questions can result in either an overpayment or an underpayment of taxes.

This is especially true if you do not change your withholding after major changes in your life, such as marrying, divorcing or having a child.

Many people work multiple jobs or bring in income on theside. This work can help fulfill a passion or make ends meet, but it can alsochange your tax responsibilities, and you may wind up owing more taxes.

To appropriately measure your tax burden each year, you need to file an income tax return, typically the IRS Form 1040. Completing your tax forms will help to determine if you will receive a refund or if you must make an additional payment and the specific amounts involved.

In many cases, you will also need to file a state income tax return, although the specific laws vary from state to state.

For the 2019 tax year, your tax return must be filed on or before April 15, 2020.

Canada Tax Checklist: What Documents Do I Need To File My Taxes

Picture this. Tax season has snuck up on you once again and youre scrambling trying to find all the documents you need, trying to make sure youre not forgetting anything.

You may not have an idea of where to start and this is why having a tax checklist is important and a great way to stay organized. In this article, well go through everything you need to have handy when filing your taxes.

Payment Date For 2021 Taxes

Knowing these dates will help you prepare enough in advance, so you dont miss any deadline for filing, payment or both. You can begin preparing for these deadlines as early as the January before your taxes are due. Much of the supporting documentation youll need should arrive by the end of February so you can file your taxes in time.

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Why You Might Want To File A Tax Return Anyway

If your income falls below the minimum income requirements, you might want to file a return if it will earn you a tax refund. This would be the case if you had any taxes withheld from your income, such as withholding on wages or retirement plan distributions, so you overpaid your taxes, because the income falls below these filing thresholds. No tax would be due, and you’d be entitled to a refund of the money that was withheld.

Filing could also generate a tax refund if you’re eligible for one or more of the other refundable tax credits, such as the Earned Income Credit. You’d have to file a tax return to calculate and claim the credit, and to request a refund from the IRS.

You might also want to file a return if you have beenor think you might bea victim of identity theft. Filing a return puts the IRS on notice as to what your true income was for the year, and it prevents a thief from filing a false tax return using your name and Social Security number.

Heres The Rule On Tax Filing And Stimulus Checks

When stimulus checks were authorized, the requirements for eligibility did notinclude filing or paying taxes. In other words, if your income is so low that you dont have to file a tax return, you were still eligible for the payment.

However, the IRS did use information from your past returns both to determine eligibility and to find your financial information to deliver your check. In other words, if you didnt file a return in 2018 or in 2019, you were still eligible for a check, but the IRS wouldnt have known where to find you to pay you your money.

To get around this problem, the IRS collected information from the Social Security Administration and the VA so it could send out checks to individuals who receive these benefits but dont file returns. The agency also set up an online form for non-filers that people could use to provide the necessary details for the IRS to send their stimulus payments. Those who dont get SSA or VA benefits and who dont file returns were able to use this form. And individuals who do get benefits could also use the non-filers form to alert the IRS to their dependents and claim the stimulus money for them .

Youll now have to file a return because the stimulus payments that were made were an advance on a tax credit. Its late to get the advance but not too late to claim the credit, which is being referred to as a Recovery Rebate Credit.

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Individuals Living Abroad Or Traveling Outside The United States

If youre living or traveling outside the U.S. or Puerto Rico on May 1, you have until to file your return. You must still pay any tax you expect to owe by the May 1 due date.

Enclose a statement explaining that you were out of the country, and write Overseas Rule on the top of your return and on the envelope.

Tax Filing Season Begins Jan 24 Irs Outlines Refund Timing And What To Expect In Advance Of April 18 Tax Deadline

IR-2022-08, January 10, 2022

WASHINGTON The Internal Revenue Service announced that the nation’s tax season will start on Monday, January 24, 2022, when the tax agency will begin accepting and processing 2021 tax year returns.

The January 24 start date for individual tax return filers allows the IRS time to perform programming and testing that is critical to ensuring IRS systems run smoothly. Updated programming helps ensure that eligible people can claim the proper amount of the Child Tax Credit after comparing their 2021 advance credits and claim any remaining stimulus money as a Recovery Rebate Credit when they file their 2021 tax return.

“Planning for the nation’s filing season process is a massive undertaking, and IRS teams have been working non-stop these past several months to prepare,” said IRS Commissioner Chuck Rettig. “The pandemic continues to create challenges, but the IRS reminds people there are important steps they can take to help ensure their tax return and refund don’t face processing delays. Filing electronically with direct deposit and avoiding a paper tax return is more important than ever this year. And we urge extra attention to those who received an Economic Impact Payment or an advance Child Tax Credit last year. People should make sure they report the correct amount on their tax return to avoid delays.”

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Is There A Penalty For Filing For A Tax Extension

No, filing for an extension does not incur a penalty. In most cases, what leads to penalties is not paying on time, not paying at all, or not paying enough. If you fail to pay everything you owe, the IRS will charge you interest on the amount outstanding until your bill is fully settled. If that happens to be less than 90% of the total, you might also be hit with a late payment penalty.

When Youll Receive The Missing Stimulus Money

If the IRS agrees with your calculation, the missing stimulus money will be added to your tax refund or used to reduce the amount you owe.

The IRS will begin accepting tax returns on February 12, and as in prior years, 90 percent of refunds are expected to be issued within 21 days of filing, says Pickering. However, due to the extra complexity of this new tax credit calculation and the ongoing pandemic, the IRS may require more time to review returns this year, she adds.

Submit your return digitally and set up direct deposit for the quickest turn-around time. Paper filers should expect longer waits of about four to six weeks since the IRS must manually input data.

You can check the status of your return by using the IRSs Wheres My Refund tool.

If you have an outstanding balance with the IRS from a previous year or owe more in taxes for 2020 than the amount youre due in stimulus payments, you likely wont see any money deposited into your bank account, but your debt to the government will be cleared or reduced.

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Special Rules For Taxpayers Age 65 And Older

Taxpayers who are age 65 or older have different, more generous filing thresholds. You would be considered age 65 for tax purposes if you were born on Jan. 1, 1957. However, the age-65 rule doesn’t apply to you if your income for the tax year was $5 or more and you were married but don’t file a joint return.

For most people, Social Security benefits dont count toward your income. However, they will if:

• You lived with your spouse at any time during the tax year and are submitting a married-filing-separate return.
• Half of your Social Security benefits plus your other gross income and tax-exempt interest exceeds $25,000

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 one of the below situations applies for tax year 2021:

For example, let’s say you’re single, 16 years old, not blind, and your parents claim you as a dependent. You had $13,000 in earned income last year. You would have to file a tax return because that’s more than the threshold of $12,550 for tax year 2021. If all else was the same, but you were blind, you would not have to file because that’s less than the threshold/standard deduction of $14,250 for 2021.

You must also file a tax return if either your unearned or your earned income exceeds the applicable amount for your circumstances. For example, you would have to file a return if you had $1,101 in unearned income, even though you only had $10,000 in earned income, were single and under 65 last year, and someone claimed you as a dependent. You may also have to file if your gross income is greater than the threshold computed for your circumstances. The $5 rule for married taxpayers filing separate returns still applies, as well.

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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.

Additional Information About Stimulus Payments

If you have questions, the IRS website hasdetailed information about stimulus payments readily available for individuals, families, and businesses. You can even calculate the amounts of your entitlement to stimulus payments through links the IRS provides. If you need personal assistance, the IRS providestelephone help for some types of issues.

If you prefer not to contact the IRS directly, you should contact a tax professional for assistance. Legal issues relating to the stimulus payments can be extremely complex in some circumstances, so its not advisable to try to resolve them without some type of help.

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Understand How Your Taxes Are Determined

The government decides how much tax you owe by dividing your taxable income into chunks also known as tax brackets and each chunk gets taxed at the corresponding tax rate. The beauty of this is that no matter which bracket youre in, you wont pay that tax rate on your entire income.

The progressive tax system in the United States means that people with higher taxable incomes are subject to higher federal income tax rates, and people with lower taxable incomes are subject to lower federal income tax rates.

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Volunteer Income Tax Assistance

The IRS’s Volunteer Income Tax Assistance program offers free basic tax return preparation to people who generally make $58,000 or less and people with disabilities or limited English-speaking taxpayers. While the majority of these sites are only open through the end of the filing season, taxpayers can use the VITA Site Locator tool to see if there’s a community-based site staffed by IRS-trained and certified volunteers still open near them.

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Do You Have To File A Return

File a return for 2021 if:

• You have to pay tax for the year
• You want to claim a refund
• You want to claim the Canada workers benefit or you received CWB advance payments in the year
• You or your spouse or common-law partner want to begin or continue receiving credits and benefits such as:
• guaranteed income supplement

Note

If you have a spouse or common-law partner, they also have to file a return. For more information, see Booklet T4114, Canada Child Benefit and related federal, provincial, and territorial programs, and Guide RC4210, GST/HST Credit.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

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I Got An Irs Letter Saying It Sent Me A Stimulus Check Is That Reportable And Taxable

The IRS recently mailed Letter 6475 to taxpayers who received a third round stimulus payment, which the agency started sending out in March 2021.

While the payment isn’t taxable, you should report the number from that letter on your 2021 return. The last thing you want is for there to be a discrepancy between the IRS records and what’s on your return. That will cause delays in processing your return and issuing your refund.

And you’ll want to use that number to work out whether the IRS actually owes you more by way of a recovery rebate credit, once you calculate how much more of the stimulus payment you’re due on the basis of your actual 2021 income. Taxpayers who earned less in 2021 than 2020 may be eligible for more money. The same goes for anyone who had a child last year. And for very low-income taxpayers who didn’t receive any payment, filing a return now is your chance to claim it.

Benefits Of Filing Taxes Sooner

You may have until April 15 to meet your federal taxes deadline, but there are numerous benefits to filing earlier. Consider the following advantages:

• Direct deposit could shorten the time it takes to receive your refund. Time is money, and the earlier you get your money, the more opportunities you have to put it to use. A tax refund thats invested in March, for example, can earn more interest than one you invest in June. File your tax return electronically to get the fastest tax refund by requesting direct deposit to your bank account. This can shave weeks off the time it will take to receive a tax refund check in the mail.
• If youre working with a tax professional to file your taxes, youre more likely to get the appointment you want. The closer it gets to the tax deadline, the more quickly appointments get filled. Schedule your appointment as early as you can to ensure youre able to meet with a tax professional when you want.
• Identity Theft is on the rise. The Insurance Information Institute reported a projected increase in losses from identity theft cases to rise from $502.5 billion in 2019 to $721.3 billion in 2021. The earlier you file your 2021 taxes, the less time an identity thief has to file a fake tax return under your name and steal your tax refund.

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