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We all knew this day was coming. The pandemic is over, but the fallout has just begun. Where once the U.S. government was giving away free money to stimulate the economy, now they struggle to pay their own overdue debts. It’s not an issue of funds. The IRS is backlogged by its own inefficiencies. Many Americans are still waiting for tax refunds from last year.
File your tax return early this year. The IRS is accepting them as of January 24th. They’re starting the process early in the hopes they can somehow keep ahead of the demand. That’s a noble sentiment, but don’t get your hopes up. The additional complexities of the advance child tax credit and recovery rebate credits will cause delays.
Electronic Filing is Strongly Recommended This Year
The exact numbers are not available, but most of the unpaid tax refunds from last year were requested via paper filings. The electronic option has been available for years, yet some people choose not to use it. That would be a big mistake this year. Electronic filings have the best chance of being processed quickly. File early and you may get a refund in a few weeks.
Of course, nothing is guaranteed in 2022. An economic recovery from a pandemic hasn’t happened in a hundred years, back when the IRS was barely half a century old. They didn’t have a playbook for it then and they don’t really have one now. That’s not for lack of effort. The volume is simply too high for the limited resources they have available.
Go to a tax preparer if you can afford one. You’ll notice a few extra line items when you download this year’s 1040. You can certainly use the instruction book to find directions on how to fill those out, but a professional tax preparer will make sure you do it right. Make an appointment right now if you haven’t done so already. They’re backed up too.
Tax Tips for Independent Contractors and Business Owners
Taxpayers receiving a 1099 and businesses using revenue reports don’t need to worry about getting a refund back. They typically need to pay something out this time of year. That doesn’t mean you should ignore your deadline dates. Interest and penalties aren’t backlogged. They’re being assessed right on time. You can count on that to continue.
As usually, there are some changes in the tax code that dictate what you can or cannot deduct as a business owner. Hire an accountant if you can afford one. If not, check the recent numbers on capital gains taxes and the work from home deductions if you’re a home-based independent contractor. The latter is one area where the IRS seems to have made improvements.
2022 Tax Deadline is April 18th
The tax deadline has been moved up a few days this year. It’s April 18th, 2022. That doesn’t mean you should wait until the last minute to file your return. If you want to get a refund within a reasonable period, file early. If you owe money, don’t assume the backlog gives you a grace period. File on time and pay what you owe in full to avoid interest and penalties.
