Tax season 2022: What you need to know about filing your taxes
U.S. Department of the Treasury Internal Revenue Service (IRS) 1040 Individual Income Tax forms. (Daniel Acker/Bloomberg via Getty Images)
WASHINGTON - Tax season is underway as millions of Americans are getting their documents together to file for their tax refunds. The Internal Revenue Service (IRS) is encouraging people to file their taxes quickly, preferably through an electronic return.
The agency is understaffed and managing a massive backlog of unprocessed paper tax returns from the previous year.
But before you file your tax return, here’s what you need to know.
How to file your taxes
It’s important to have your documents in order when preparing to file your taxes in 2022. And IRS.gov has a full list of what you will need prior to filing your return.
Organized tax records can make the process of preparing a complete and accurate tax return easier because you can avoid errors that lead to processing delays with your tax refund.
According to the IRS, you shouldn’t file your tax return until you have the following documents
- Forms W-2 from your employer(s)
- Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, distributions from a pension, annuity or retirement plan
- Form 1099-K, 1099-MISC, W-2 or other income statements if you worked in the gig economy
- Form 1099-INT if you were paid interest
- Other income documents and records of virtual currency transactions
- Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance premium tax credits for Marketplace coverage
- Letter 6419, 2021 Total Advance Child Tax Credit Payments to reconcile your advance Child Tax Credit payments
- Letter 6475, Your 2021 Economic Impact Payment, to determine whether you're eligible to claim the recovery rebate credit.
Moreover, it's important to inform the IRS if your address has changed and to notify Social Security Administration of a legal name change.
According to the IRS, most income is taxable and it includes unemployment income, refund interest, and virtual currencies.
Additionally, the IRS has a Free File Program, a free service that allows you to prepare and file your federal income tax online using guided tax preparation.
When can you file your taxes?
Tax-filing season started Jan. 23 and your return is considered filed on time if your envelope is properly addressed, postmarked, and deposited in the mail by the due date, according to the IRS.
If an individual can’t file their tax return by the April 18 due date, they should request an extension of time to file. To receive an automatic six-month extension of time to file your return, you must file
Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return by the due date of your return.
An extension of time to file is not an extension of time to pay. According to the IRS, you may be subject to a late payment penalty on any tax not paid by the original due date of your return.
The IRS also has guidelines for members of the military who need an extension to file their taxes.
Special rules may apply to service members who served or are currently serving in the Armed Forces in a combat zone or a contingency operation, or become hospitalized as a result of serving in the military. You generally have at least 180 days after you leave the designated combat zone/contingency operation to file and pay taxes.
When should you file your taxes?
The deadline for tax returns and requesting an extension to file taxes is Monday, April 18, three days later than the normal April 15 deadline. The later date is a result of an Emancipation Holiday in Washington, D.C. By law, D.C. holidays impact tax deadlines for everybody the same way federal holidays do.
Deadlines to file tax returns have been extended in the past two year due to the pandemic but it’s unclear this year if the IRS will offer leniency to taxpayers. Extensions can be requested online by filling out Form 4868 which can be found at IRS.gov.
According to the IRS, when filing your tax returns one important step is knowing your filing status to determine filing requirements, standard deduction, eligibility for certain credits and your correct tax. The IRS has a tool on its website where individuals can find out their filing status.
The agency also recommends individuals file past due tax returns. By filing a past due tax return, you can pay now to limit interest charges and late payment penalties, according to the IRS.
Additionally, the IRS has a Free File Program, a free service that allows you to prepare and file your federal income tax online using guided tax preparation.
When will you receive your tax refund check?
Refunds are usually received within three weeks of the date when the IRS receives your tax return and it’s even faster if an individual chooses to have the return directly deposited into their checking or savings account.
If you mail a paper tax return, it can take six to eight weeks to process the return, according to the IRS.
Child Tax Credit
The Child Tax Credit offers $3,600 a year for children under the age of six and $3,000 for children ages 6 to 17. But six months of payments will be advanced on a monthly basis through the end of the year. This means eligible families will receive $300 a month for each child under six and $250 per child older than that.
When a person files their 2021 tax return including the Child Tax Credit during the 2022 tax filing season, they will need to compare the following:
The total amount of the advance Child Tax Credit payments that they received during 2021 and the amount of the Child Tax Credit that you can properly claim on your 2021 tax return.
If the amount of your Child Tax Credit is more than the total amount of your advance Child Tax Credit payments, you can claim the remaining amount of your Child Tax Credit on your 2021 tax return, according to the IRS.
How is cryptocurrency taxed?
The IRS treats virtual currencies like cryptocurrency as property, which means they’re taxed similarly to stocks. If an individual purchased cryptocurrency with U.S. dollars, and those assets have been sitting untouched in an exchange or your cryptocurrency wallet, they shouldn’t worry about reporting it to the IRS this year.
Reporting is required when certain events come into play, most commonly:
- Trading one cryptocurrency for another
- Selling cryptocurrency for fiat dollars (government-issued currency)
- Using cryptocurrency to buy goods or services (e.g., paying for a cup of coffee with cryptocurrency)
Cryptocurrency exchanges won’t be required to send taxpayers 1099-B forms, also known as tax-reporting summaries, until the 2023 tax year. So the responsibility is on traders to keep accurate records of their transactions.
If your tax situation is complicated, you should consider working with a cryptocurrency-savvy tax professional. For more information on tax filing and refund information, visit IRS.gov.
The Associated Press contributed and FOX 5 Atlanta contributed to this story
This story was reported from Washington, D.C.