Tax Season Definition

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Tax Season Definition

What Is Tax Season?

Individual taxpayers normally prepare financial accounts and reports for the previous year and file their tax returns during tax season, which runs from January 1 to April 15 of each year. Individuals in the United States must normally submit their yearly tax return by April 15 of the year after any reportable profits. Late penalty fees and interest charges apply to tax returns filed beyond the end of the tax season.

The Internal Revenue Service (IRS) has stated that the tax season in the United States will begin on Monday, January 24, 2022, when the IRS will begin collecting and processing 2021 tax year returns.

Key Takeaways

  • Individuals and corporations prepare and submit their income taxes throughout tax season.
  • In the United States, tax season normally runs from January 1 to April 15, with the IRS beginning to accept returns for the 2021 tax year on January 24, 2022.
  • Employers, financial custodians, and other companies that create revenue for people must furnish documents and statements for tax preparation reasons throughout tax season in order for taxes to be filed on time.

Understanding Tax Season

Tax season is the time when all income taxes must be submitted up to the deadline. Each year, the deadline is usually April 15. If this date occurs on a weekend or holiday, it is rescheduled for the next working day. For example, in 2022, Emancipation Day in Washington, D.C. will occur on April 16, a Saturday. As a result, it will be officially recognized in the Capital on April 15, the nearest weekday. The municipal and federal offices in Washington, D.C., including the IRS, will be closed for the holiday.

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As a consequence, taxpayers will have until Monday, April 18, 2022, to submit their 2021 tax returns and pay any taxes that are owed. Unless you live in Maine or Massachusetts, tax returns filed after this date are subject to late penalty costs. Taxpayers in the two states have until Tuesday, April 19, 2022, since April 18 is Patriots’ Day.

Emancipation Day celebrates the signing of the District of Columbia Compensated Emancipation Act by President Abraham Lincoln in 1862. The Act, which emancipated 3,000 enslaved persons in the neighborhood, has been honored in Washington, D.C. since 2005.

During tax season, companies must provide tax paperwork to workers, contract laborers, and others, such as royalty earners, that describe the data needed to complete an individual’s tax returns. Individuals who are obligated to submit a tax return must do so by April 15 or seek an extension.

Many tax preparers and accounting experts are quite busy during tax season. The three-and-a-half-month period at the start of the year is when the essential documentation, such as pay and earnings statements (such as 1099s or W-2s), is gathered in order to prepare tax returns.

While some people compute their own tax returns, many depend on the skills of tax preparers and accounting experts to ensure the paperwork is submitted accurately and to enhance the tax return’s financial result. Individuals earning $73,000 or less (in 2021) may submit their taxes for free under the IRS’s Free File program. Individuals are required to submit federal, state, and, in certain situations, local income tax returns.

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According to the IRS, all taxpayers should maintain copies of their prior-year tax returns for at least three years. A taxpayer will be asked to submit the past three years of their documentation in the case of an IRS audit. They will be required to provide seven years of papers in severe instances, such as suspicion of fraud.

For fiscal year 2022. A person with a gross income (total income from all sources) of more than $12,950 must pay federal tax, according to the IRS. Independent contractors, often known as “non-employee compensation,” must submit a self-employment tax return and pay self-employment taxes on any net earnings from self-employment of $400 or more.

Employers have until January 31 to submit and deliver W-2s to workers. Businesses that engage independent contractors must issue Form 1099-NEC to these non-employees beginning with the 2021 tax year. This form superseded 1099-MISC, which is still in use for payments such as rent, rewards, and health care, among other things.

Special Considerations

Although the deadline for filing your taxes is almost typically April 15, the IRS may have to extend it in certain situations. This was true for the as well as the 2020 federal tax year. Due to the coronavirus epidemic, the government extended the application deadline for persons to May 17, 2021.

Because of the winter storms that affected Texas, Oklahoma, and Louisiana in February 2021, an additional extension was granted. Individuals and companies now have until June 15, 2021 to submit their 2020 tax filings. Then, in the spring, storms caused enough damage in Tennessee, as well as sections of Alabama and Kentucky, to warrant more extensions.

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Why Filing Early Can Make Sense

Despite the fact that many taxpayers submit their tax returns on or around April 15 each year, there is no need to wait until the last minute. Filing an early tax return might be advantageous for a number of reasons.

On Monday, January 24, 2022, the IRS starts collecting and processing 2021 tax year returns. Even if you don’t file early, there are reasons to start planning as soon as possible.

Starting your filing procedure early allows you to acquire the proof required to claim all of your deductions. You will escape the headache that comes from worrying about calculations and receipts in the middle of the night. Your accountant will likely have a more flexible schedule and will be able to begin working on your accounts right away. Furthermore, by filing early, you will thwart would-be identity thieves.

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