Wenatchee CPA Tackles Last Minute Tax Myths & Tips
Your 2022 tax return is due April 18th but other deadlines are looming. CPA Kyle Meissner in Wenatchee reminds taxpayers your last chance to claim a refund for tax year 2019 is April 18th. The deadline also applies to tax returns for Trusts & Estates (Form 1041) Corporations (Form 1120). Contributions for 2022 to an IRA or HSA can be made until April 18th and 1st quarter Estimated Tax Payments for 2023 are also due April 18th.
Meissner, with the accounting firm Cordell, Neher & Company in Wenatchee has a few myth busting facts for taxpayers from the IRS.
MYTH: If you are not required to file, don't bother
Generally, taxpayers with gross income less than $12,950 for single filers, and $25,900 for married filing jointly, are not required to file a federal tax return. However, low-income individuals may mistakenly assume that since they owe no tax, they're not entitled to a refund. Meissner says these individuals may get money back if they file a tax return. For example, if an individual qualifies for the Earned Income Tax Credit (EITC) or if their employer withheld taxes from their paycheck, they may be owed a refund when they file their taxes.
Other examples of taxpayers who may be missing out on a refund by not filing a return include;
• Low- to moderate-income workers and working families who don't normally file a return. They may miss out on certain credits for individuals, including the EITC, the Child Tax Credit, the Child & Dependent Credit and the Premium Tax Credit if they don't file.
• People experiencing homelessness who can use the address of a friend, relative or trusted service provider, such as a shelter, drop-in day center or transitional housing program on the tax return).
• Students just entering the workforce or who may have only worked part time.
• All eligible parents of qualifying children born or welcomed through adoption or foster care in 2022. They may be eligible for the Child Tax Credit.
MYTH Taxpayers don’t need to report income if they didn’t receive a 1099 this year
Meissner reminds taxpayers that all income must be reported unless it is excluded by law, whether or not the income was reported to you on a 1099. It is important to report all income to avoid receiving a notice or bill from the IRS. Remember to report the following types of income;
• Goods created and sold on online platforms
• Investment Income
• Part-time or seasonal work
• Self-employment or other business activities
• Services provided through mobile apps like Venmo. Meissner clarifies money received as a gift or reimbursement isn’t taxable and doesn’t require a 1099 form. If you often receive money from friends and family through Venmo or Cash App type platforms, payments should be designated properly so they aren’t reported on a 1099 for 2023.
And the most important myth of all....
MYTH: If a taxpayer requests an extension, they don't need to do anything until Oct. 16th.
Meissner has stressed the importance of filing an extension by April 18th if you cannot complete all of your return due to missing paperwork or a specific form but the extension to file is not an extension to pay any tax due. Tax balances are still due on April 18. Taxpayers who request a six-month extension to file their taxes will have until Oct. 16, 2023, to file their 2022 federal income tax return. Meissner says the IRS encourages tax payers to file their return as soon as possible instead of waiting until the Oct.16 extension deadline. Request an extension to file at irs.gov
Finally, if you are wondering where your tax refund is, the IRS has a tool to check the status of a refund. Look for the Where's My Refund? link at IRS.gov or via the IRS2Go mobile app. Where's My Refund? has the most up to date information available about a refund. Taxpayers with limited internet access can reach Where's My Refund? by calling the automated refund line at 800- 829-1954.