Tax season is underway, and California residents are getting an extension due to all the recent winter storms — meaning the deadline for most to file is October 16. Michelle Singletary, Washington Post personal finance columnist shares her tax tips.
If you’re expecting a refund, file your taxes now so you can get your money sooner, Singletary says.
But if you owe the IRS money, take your time to get your finances in order.
“Now is the time to contact the IRS. You can go online, and you might want to … look into whether or not you need to set up a payment plan. You definitely want to file even if you don't have the money to pay, because there's two penalties when you don't pay. … So now you've got some extra time to do all of that. But you must meet that deadline if you owe.”
Refunds are expected to be smaller this year too since COVID pandemic stimulus payments have ended, and the economy is improving, she notes.
Particularly, expect a smaller Child Tax Credit because federal funding for it ended. “It was really a great thing for many parents because it allowed them to lift kids out of poverty. But now we're going back to what it was before the pandemic. And so now … you’ve got to have a qualifying child, and it's up to $2,000 for kids 17 and under.”
Some filers can also claim an adult dependent — children 18 years old and up and/or older relatives — on their returns if they meet a certain criteria.
“Check with the IRS to figure out what is a qualifying child and a qualifying relative. But increasingly, adult children find themselves still living with their parents, or parents are still paying the majority of the bill,” Singletary says. “[If] they are not paying the majority of the income, then you may be able to claim them as a dependent. And this is particularly a good area for people who may be taking care of their elderly parents, like you're responsible for … 50% or more … for the things that they need.”
As for teachers, they can deduct up to $300 for classroom expenses from 2022. Married couples who are both eligible educators can get a combined $600.
If you need an accountant to help, Singletary says the IRS website is a good source for vetted, qualified candidates.
How soon will you receive your return? About 21 days if you have a straightforward return, file electronically, and request direct deposit, Singletary says.
“Make sure there's no errors, right? … Double check your return. And if it's error-free for the most part, you should be able to get your refund in just a couple of weeks.”