Can I file my taxes for free?
You can! The IRS partners with several industry-leading tax prep companies to offer free e-filing. Depending on your income, you may be eligible to use these name-brand tax software products to file both federal and state income tax returns for free. Visit the IRS website for more details.
Is unemployment taxed?
At the federal level, yes, unemployment benefits are taxed just like wages. In 2020, the federal government waived income tax on the first $10,200 in unemployment benefits (for people with incomes under $150,000). That only applied to benefits received in 2020. A similar law was not passed for 2021.
At the state level, it depends on the state. Many states tax the benefits just like the federal government. Some tax only part of the benefit, and some states don’t have state income tax, so they don’t tax any part of the benefit. Here is a state-by-state guide to unemployment taxes.
Just like a traditional paycheck, you can choose to have taxes withheld from your unemployment check to cover your federal tax bill. If you did not withhold taxes from your unemployment benefits, you will have to pay the taxes when you file your return. The IRS website has more information about how this works.
Will the 2020 or 2021 stimulus checks affect my taxes?
No. According to the IRS “the payment(s) is not income and taxpayers will not owe tax on it. The payment will not reduce a taxpayer’s refund or increase the amount they owe when they file their 2020 or 2021 tax return the next year.”
This has caused a bit of confusion because the stimulus checks are what is known as a Recovery Rebate Credit. A tax credit is subtracted from your overall tax bill. Because of the pressing financial realities of the pandemic, the government gave eligible Americans these tax credits early. You will not have to pay taxes on these checks, but you do have to claim them.
Can I quality for a stimulus check once I file my 2021 taxes?
Yes! The IRS is sending out letters in January with information about the stimulus checks. It will explain how to claim the stimulus on your taxes and what to do if you didn't receive one.
On the 2021 tax forms, there will be a section to report the amount of stimulus you received this year and to calculate if you are owed more. Examples might include if you were furloughed or laid off, had your pay reduced, or if you had a baby in 2021.
What’s the earliest I can file my taxes?
The IRS has announced that it will start accepting returns on Jan. 24, 2022. This is a few weeks earlier than years past because the IRS needs additional time to process.
What is the deadline to file taxes?
Traditionally, the tax deadline is April 15, but the IRS has extended the filing date until Monday, April 18, 2022, because of the Emancipation Day holiday in Washington, D.C. If you a resident of Maine or Massachusetts, the deadline is April 19, 2022, because Patriots' Day is observed on Monday, April 18, 2022. Taxpayers can request an extension on filing their taxes, which pushes the deadline to Oct. 17, 2022.
Can I file my taxes early?
Some services, like H&R Block and TurboTax, allow you to file as early as Jan. 1, but your return cannot be officially submited to the IRS until filing is open on Jan. 24, 2022. You’ll just have to wait longer to get your tax refund.
How long will it take to get my tax refund?
The IRS issued refunds for about 90% of taxpayers in less than 21 days from the date their return was received in 2021. But there are some factors that can affect how long it takes.
- The earlier you file the better. The IRS gets busier as the tax season progresses.
- E-filings are processed faster than mailed-in returns.
- Direct deposit is always faster than having your refund mailed to you.
- Tax returns with an Earned Income Tax Credit (EITC) or a Child Tax Cred (CTC) will not be processed until starting mid-February. These credits are more often misused than others and the IRS needs extra time to verify that taxpayers qualify.
What is a tax deduction?
A tax deduction is a reduction in your taxable income. A tax deduction is different than a tax credit, which is subtracted from your overall tax burden. For more on this, check out our 11 Common Tax Deduction & Credits article.
For example, if a family’s income is $50,000 per year and they are eligible for a $500 deduction, the family will only be taxed on $49,500 in income.
What is the standard deduction in 2021-2022?
$12,550 for single filers and $25,900 for married couples filing jointly.
What is a tax credit?
A tax credit is a direct reduction in the overall amount of taxes owed. A tax credit is different than a tax deduction, which lowers the taxable income instead of the tax bill directly.
What is the Child Tax Credit (CTC) for 2021-2022?
The American Rescue Plan (ARP) passed in mid-March 2021 expanded the Child Tax Credit to $3,600 for children under age 6 by the end of 2021 and to $3,000 for children 7–17. There were many other changes as well, including advance payments, which began in July 2021, and that the CTC is also now fully refundable.
Before ARP was passed, the Child Tax Credit was $2,000 per qualified child 16 and younger at the end of the calendar year and $500 per qualifying dependent, and only up to $1,400 was refundable.
