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

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

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

Ideally, yes. But if that proves difficult – or if you’re just not in the mood – request an automatic six-month extension using Form 4868.
Of course, there are some taxpayers whose filing deadline is after April 18th. They include residents of Maine and Massachusetts, whose official filing date is April 19. And the deadline is a month or more for people living in federally declared disaster areasas well as American 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 if I don’t pay on time?

You’ll have to pay even more than you owe, as you’ll be slapped with penalties and interest.
If you really can’t afford to pay on time and you have a good reason for it, you can present your case to the IRS by attaching a statement to your return when you file. If the IRS accepts your explanation, it may waive the late penalty. At a minimum, you must demonstrate that your default is not the result of “willful neglect.”
To show this, 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 late, you might be able to set up a repayment plan with the taxman.

What if the IRS owes me money?

If you file an accurate return electronically and owe a refund, 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 using the IRS online tool Where is my refund?

I worked remotely for much of 2021. Will this affect my taxes?

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

At the very least, you’ll likely have to file more than one state tax return for 2021, which will cost you more if you pay someone else to prepare your taxes.

And in some cases — primarily involving five states that have so-called convenience rules — you can even be taxed twice on the same income.

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

Good news: you are do not imagine things. The child tax credit causes headaches for tax filers and tax practitioners alike.

Many temporary changes have been made to the child-only tax credit for 2021. For starters, it has been increased to $3,600 per child 5 and under and $3,000 per child 6-17.

It’s also been temporarily made fully refundable for 2021, meaning you can get the maximum credit amount even if it exceeds your federal income tax.

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

You should have received a letter from the IRS within the past two months detailing what you have already been paid. This is an amount that you will have to declare in your return. And then you will have to claim the other half of the credit owed to you, which you will get in the form of a refund.

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

The IRS recently sent Letter 6475 to taxpayers who have received a third round stimulus paymentwhich the agency began sending in March 2021.
Although the payment is not taxable, you must report this letter number on your 2021 return. The last thing you want is for there to be a discrepancy between IRS records and what appears on your statement. 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 actually owes you more through a recovery rebate creditonce you have calculated the additional amount of stimulus payment due to you based on your actual 2021 income.

I have cryptocurrencies. Should I report it?

It depends.

Merely buying and holding cryptocurrencies are not taxable events.

But if you sold cryptocurrencies, used them to buy something, or were paid in crypto, these are taxable events and must be reported.
Virtual currencies are taxed as property or as an investment when you sell their. To make matters more confusing, using them to buy something technically counts as a sale. You will therefore be subject to capital gains tax when you resell them.
If you get paid bitcoin or other crypto, on the other hand, which will be treated as taxable income for you. The same will apply to income derived from mining or staking.
And starting next year, your crypto activities will be subject to third-party reporting, meaning you and the IRS will receive the same tax forms reporting your sales and income.

About Alma Ackerman

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