The 2022 tax season is officially underway.
The Internal Revenue Service began accepting and processing 2021 returns on Monday Jan. 24. And, for now, they’ll be doing so through April 18 (this year’s three-day extension comes as the 15th falls on a holiday).
Of course, tax deadlines have become squishy things over the past two years due to the pandemic. In 2020, the filing date was pushed to July 15. And last year, despite initially saying there would be no extension, the IRS moved the deadline from April 15 to May 17.
And if you’re hoping to see your refund in a hurry, well… you might want to adjust those expectations. The IRS is warning that refunds could take longer than the usual three weeks to process this year. And there are still millions of unprocessed individual returns remaining from the 2021 tax season.
“There is no way to sugarcoat the year 2021 in tax administration: From the perspective of tens of millions of taxpayers, it was horrendous,” read a report from the National Taxpayer Advocate, an independent organization within the IRS. That watchdog group later added “2021 was the most challenging year ever for taxpayers.”
On top of all of that, there’s confusion over Child Tax Credits, as well as questions from the millions of Americans that have struck out on their own and need to learn about self-employment deductions. Your chances of getting someone from the IRS on the phone are still extraordinarily slim.
Fortunately, the news isn’t all bad. You can get free help putting together your taxes—and you can always get an extension if you won’t be able to finish in time.
Here are some answers to the most frequently asked tax questions.
When does tax filing season begin?
The Internal Revenue Service began accepting and processing tax returns for the 2021 tax year on Jan. 24. That’s 17 days earlier than last year, when the agency got a late start after having to reprogram and test its systems after the tax law changes passed in December 2020 as part of the second round of stimulus checks.
The start of tax season is generally one of two peak times for the IRS, as people with relatively simple tax filings and those expecting big refunds often file as soon as possible. Many people, though, might not have all the paperwork they need at the start of filing season, as there are some new forms that are especially important for families.
When are my 2021 taxes due?
You've once again got until April 18 to file your taxes this year, three days later than usual. That’s because of the Emancipation Day holiday in the District of Columbia. (By law, Washington, D.C., holidays impact tax deadlines for everyone in the same way federal holidays do.)
If you happen to live in Maine or Massachusetts, you’ve got until April 19, 2022 to file, due to the Patriot’s Day holiday in those states. The IRS has also extended the deadline for victims of the 2021 Colorado wildfires and victims of the December tornadoes in Illinois, Kentucky, and Tennessee until May 16.
And, yes, there’s already talk in Congress about a possible further extension. Senate Finance Committee Chairman Ron Wyden said he is considering more ways to make the filing season easier, including a possible extension of the filing date.
Not able to make the deadline, regardless of when it applies for you? You can file for an extension before that date, which will give you until Monday, October 17, 2022 to file. Also, special rules apply to people serving in the Armed Forces who are in a combat zone/ contingency operation or have been hospitalized due to an injury sustained in such an area. Those individuals have 180 days after they leave the area to file and pay taxes.
What tax bracket am I in?
With income levels so drastically affected by the pandemic, tax law changes and more, it’s a good idea to see if your bracket has changed. It will, however, depend in part on how you file.
Married couples (filing jointly)
What’s the standard deduction this year?
The standard deduction for married couples filing jointly jumped $800 to $25,900. For single taxpayers and married individuals filing separately, the standard deduction was up $400 to $12,950. And for heads of households, the standard deduction will be $19,400, up $600.
When will I get my refund from the IRS?
Typically, the processing time for returns that receive refunds in 21 days. However, given the delays, staffing shortages and budget crisis at the IRS, it could be a bit longer this year. Tax officials say last year's average tax refund was more than $2,800. More than 160 million individual tax returns for the 2021 tax year are expected to be filed, with the vast majority of those coming before the traditional April tax deadline.
Also, the IRS is not permitted to issue refunds involving the Earned Income Tax Credit or the Additional Child Tax Credit before mid-February, so if you file early but those are items on your return, there will be a slight delay.
The IRS says more than 9 out of every 10 refunds are issued within three weeks of the day the return is filed. The best place to track where things stand is with the Where's My Refund? tool, which updates the status of tax refunds daily.
What's the fastest way to receive my refund?
The best way to speed things along, says the IRS, is to e-file your taxes. That gets the information into the IRS system a lot faster than paper filings.
Step two: Make sure you’ve signed up for direct deposit, as the IRS says that can significantly speed up your refund. It also adds more flexibility. Your refund can be split into up to three separate accounts, including Individual Retirement Accounts.
I once again worked from home for most of 2021. Can I claim a home office expense?
One question first: Did you receive a W-2 form from your employer? If so, you’re out of luck.
Home office deductions are reserved for self-employed individuals. So, even if you used your spare bedroom as an office, you won’t be able to write that off (or any ancillary expenses, like a portion of your utilities).
If, however, you work for yourself—and your income is in the form of 1099 statements instead of a W2—you are able to write off the percentage of your home that you dedicate exclusively to work.
Do my stimulus checks count as taxable income?
No. Just like in 2020, your $1,400 stimulus check will not count as taxable income. It will, though, be treated like a refundable tax credit, so it’s similar to an advance on money you would have received as part of your refund.
How should I handle Child Tax Credit payments?
Families will want to wait for the IRS letter 6419, which can help them file an accurate return and avoid delays. Even if you don’t make enough to be required to file a tax return, you’ll need this to claim any extra money that might be owed for the child tax credit.
Note that the IRS will be sending two of these 6419 letters to married couples who file a joint return. You’ll want to keep both and add up the amounts on them for your taxes, say experts.
Do I have to pay taxes on my unemployment benefits?
Last year, people who received unemployment benefits caught a break and didn’t have to pay taxes on up to $10,200 in payments. That was a one-time thing, though.
If you received unemployment benefits to help you get by in 2021, that is considered taxable income –and if you didn’t have any money withheld when you signed up for those benefits, it could be a significant amount.
Is there a free tax filing system?
IRS Free File is a program that works with brand-name online tax providers, including TurboTax and H&R Block. You'll need to have made $73,000 or less to use the system, which is now open for the current tax filing season.
How much do you have to make to file taxes?
It really comes down to your filing status and age.
People who are single and under the age of 65 who make $12,550 or more will need to file a return. If you’re 65 or older, the minimum amount jumps to $14,250.
Married filing jointly and under 65, the threshold is $25,100. (It’s back to $12,550 if you’re filing separately.) If you’re both over 65, that jumps to $27,800. And if one spouse is younger than 65 and one is older, it's $26,450.
Heads of household who haven’t yet celebrated their 65th birthday and make more than $18,800 will need to file. That jumps to $20,500 if they're over that age.
Finally, widows and widowers under the age of 65 who make over $25,100 will need to file a return. For those older than 65, $26,450 is the line in the sand.
How do I file for an income tax extension?
It’s actually pretty easy to file for an extension. The quickest way is via Free File, where you can electronically request one, which will extend your filing date until Oct. 17.
You will, however, need to estimate your tax liability, even if you haven’t calculated it. And you’ll have to pay any owed taxes on that estimate by the regular deadline.
You can also get an automatic six-month extension by using IRS Form 4868, which will also require you to estimate your tax liability, based on the data available to you. In this case, though, you won't have to make a payment immediately, but you will have to pay interest on your tax bill if you end up owing money.
I bought and sold cryptocurrencies last year. Will that affect my 2021 taxes?
Bitcoin, Ethereum, Dogecoin and more hit record highs last year. And if you were lucky enough to cash out at or near those highs, you could have seen some tremendous gains. Congratulations! Be aware, though, that the government is more interested than ever in collecting taxes on those investments.
Cryptocurrencies are subject to capital gains, meaning what you owe will depend on how much you gained or lost – and how long you held the tokens. It could be anywhere from nothing to 20% of your profits if you’re a long-term investor. If you jumped in this year, though, and held the crypto for under a year, you’ve triggered short-term capital gains and could owe up to 37% of your returns. Ideally, your exchange provides you a Form 1099-B, summarizing profits and losses. If not, you’ll have to work it out yourself.
I bought and sold meme stocks in 2021. What sort of tax bill should I expect?
GameStop and AMC might have gone to the moon last year, but those members of Reddit’s WallStreetBets community who bought and sold on the jump last year are facing some of the same issues as crypto investors, specifically short-term capital gains of up to 37%, depending on your additional income.
What common tax mistakes should I look out for?
Small errors can have big repercussions. And little things can do everything from delay your refund to put you at higher risk of an audit. Here are the most common errors, according to tax officials.
Missing or inaccurate Social Security numbers
Filing status errors
Errors in figuring tax credits or deductions
Incorrect bank account numbers
Filing with an expired Individual Taxpayer Identification Number (ITIN)
What happens if I file my taxes late?
If you miss the April 18 deadline, expect to pay more. There are two kinds of fees and penalties that could be assessed on top of any taxes you might owe—one for filing late and another for paying late. If you file your return more than 60 days late, you’re likely looking at a minimum penalty of $210 (unless you owe less than that – in which case the penalty is 100% of the unpaid tax). Otherwise, the penalty can be as much as 5% of the unpaid tax each month up to a maximum of 25%.
Late payment penalties are generally 0.5% of the unpaid tax per month, though that can build to as much as 25%. (The amount is cut considerably if you work out a payment agreement with the IRS.
Of course, if you file for an extension, these penalties do not apply. Similarly, if you can show reasonable cause for not filing, you’ll avoid them as well. And if you historically have filed on time, you might qualify for the First Time Abatement program, which will help you avoid any fees.
How can I get a bigger refund next year?
The IRS’s Tax Withholding Estimator calculator will help you target a specific refund amount and help you best prepare for it through adjustment withholdings. It’s a terrific tool for people who don’t expect major fluctuations with their income through the year.
Note that your income tax withholding isn’t based on your marital status and withholding allowances any more. Instead, it's now based on your expected filing status and standard deduction. You can also have itemized deductions, the Child Tax Credit and other tax benefits reflected in your withholding.
This story was originally featured on Fortune.com