Tax Day is coming soon. Here’s what you need to know about filing your 2021 taxes

However, the IRS still expects you to file your 2021 return and pay what you still owe before the filing deadline, which is April 18 for most taxpayers.

If you haven’t already filed, here are answers to some key questions to help you through the process:

Ideally, yes. But if that proves difficult, or you’re just not in the mood, apply for an automatic six-month extension using Form 4868.
Of course, there are some taxpayers whose filing deadline is later than April 18. They include residents of Maine and Massachusetts, whose official filing date is April 19. And the deadline is a month or later for people who live in federally declared disaster areas. as well as US taxpayers living outside the United States on April 18.

If I owe money, when is it due?

For most people, you must pay any remaining 2021 income taxes you still owe by the April 18 filing deadline, even if you get an automatic payment. Six-month extension to file.

What happens if I don’t pay on time?

You will have to pay even more than you owe, because penalties and interest will be imposed.
If you really can’t pay on time, and you have a good reason, you can make your case to the IRS by attaching a statement to your return when you file it. If the IRS accepts your explanation, you can waive the late payment penalty. At a minimum, you must show that your failure to pay is not the result of “willful negligence.”
To prove it, try to pay what you can when you file, even if it’s not the full balance. If that’s not possible and you’re really behind, you may be able to set up a payment plan with the IRS.

What if the IRS owes me money?

If you file an accurate return electronically and a refund is due, the IRS will likely send that money to you or deposit it directly into your bank account within 21 days of receiving your return.

You can check the status of things using the IRS online tool Where’s My Refund?

I was working remotely for much of 2021. Will that affect my taxes?

It depends. If you worked in a different state than your employer, you may be subject to the income tax rules of two or more states.

At a minimum, you’ll likely need to file more than one state income tax return for 2021, which will cost you more if you pay someone else to prepare your taxes.

And in some cases, notably in five states that have so-called convenience rules, you may even have to pay double taxes on the same income.

The advanced child tax credit is very confusing. How should I handle that on my tax return?

Good news: you are not imagining things The child tax credit is causing headaches for taxpayers and tax professionals alike.

Many temporary changes were made to the child tax credit for 2021 alone. For starters, it was raised to $3,600 per child ages 5 and under, and $3,000 per child ages 6 to 17.

It’s also temporarily made fully refundable for 2021, which means you can get the maximum amount of the credit even if you exceed your federal tax liability.

But here’s where the real confusion arises: The IRS has probably already sent you half of the credit you’re entitled to (six months’ worth) via monthly checks sent between July and December.

You should have received a letter from the IRS in the past few months detailing what they have already paid you. That is an amount that you will need to report on your return. And then you’ll have to claim the other half of the credit you’re owed, which you’ll get in the form of a refund.

I got a letter from the IRS saying they sent me a stimulus check. Is that reportable and taxable?

The IRS recently sent Letter 6475 to taxpayers who received a third-round stimulus payment, which the agency began sending out in March 2021.
While the payment isn’t taxable, you must report that letter number on your 2021 return. The last thing you want is for there to be a discrepancy between IRS records and what’s on your return. This will cause delays in processing your return and issuing your refund.
And you’ll want to use that number to determine if the IRS really owes you more through a recovery refund credit, once it calculates how much more of the stimulus payment you’re owed based on your actual 2021 income. Taxpayers who earned less in 2021 than in 2020 may be eligible for more money. The same goes for anyone who had a child in the past year. And for very low-income taxpayers who didn’t receive any payment, filing now is your chance to claim it.

I have cryptocurrencies. Do I have to report that?

It depends.

The simple act of buying and holding cryptocurrencies is not a taxable event.

But if you sold cryptocurrency, used it to buy something, or were paid with cryptocurrency, those are taxable events and should be reported.
Virtual coins are taxed as property, or as an investment, when you sell them. To make things more confusing, using them to buy something technically counts as selling. Therefore, you will be subject to capital gains tax when you sell them.

if you are paid Bitcoin or other crypto, on the other hand, will be treated as taxable income for you. So will any income earned from mining or staking.

And starting next year, your crypto activities will be subject to third-party reporting, meaning both you and the IRS will get the same tax forms to report your sales and income.

I can’t get in touch with the IRS and I have a question. That I have to do?

It has been very difficult for taxpayers and tax professionals to contact the IRS by phone because the agency does not have enough staff to handle the volume of calls.

If you’ve already spent time reviewing the information resources on IRS.gov to find an answer to your question, you might consider an in-person visit to a Taxpayer Assistance Center near you.

Normally you need to make an appointment during the week. But the IRS announced that many of its Taxpayer Assistance Centers will be open on the second Saturday of every month through May. You can find your local office here. Call first to make sure they will be open on the day you want to go.

What if my tax preparer makes a mistake on my return?

Honest mistakes can happen. But remember: you are responsible for the information on your return. So review your tax preparer’s work before approving it.

The US Department of Justice also warns consumers to work only with someone who is reputable and competent. Otherwise, you could be responsible for unpaid taxes, penalties, and interest.

Tell-tale signs that a preparer may be scamming you: They ask you to sign a blank return, they won’t let you review your return before you file it, or they want to deposit your refund in a way you don’t understand.

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