Issue #186: Everything you wanted to know about taxes but were too afraid to ask

Happy April!

Winter is officially over, and it’s already shaping up to be an exciting month. The sun is shining; Succession is back. darth is out of hibernation. Passover, Eid and Easter are all coming up — as are more secular celebrations like Spring Break — and my birthday is less than two weeks away.

What could possibly kill the vibe?

Oh, right. Tax Day.

The deadline to file your federal income taxes for 2022 is April 18. And although nobody likes doing their taxes — even I find myself taking breaks to watch Cousin Greg fancams — there’s no reason to let it ruin your April good mood. The Money staff has produced several stories full of expert advice that’ll make filing your 1040 positively painless.

Here are nine quick questions, answered by yours truly, about this tax season.

Why is the tax deadline not April 15 this year?

Good eye! Tax Day usually falls on April 15, but this year, that’s a Saturday. Normally it’d just move to the following Monday… but that’s Emancipation Day in Washington, D.C. So the federal tax deadline got pushed to the next day: April 18.

Most states use that deadline, too, but there are a couple of exceptions. For instance, Louisiana state taxes aren’t due until May 15. If you live in a state with individual income taxes, make sure to double-check the date.

Do I have to pay to file my taxes?

Probably not. An estimated 70% of U.S. taxpayers qualify to file their federal taxes for free through a government program called IRS Free File. If your adjusted gross income is $73,000 or less, you can access free guided tax prep on a name-brand site. All you have to do is answer a set of questions — the tax preparer will do the calculations and file your taxes without charging you. (You might be eligible to file your state taxes for free, as well, but details vary by provider.)

Above that $73,000 income threshold, the IRS provides a free set of fillable forms you can complete yourself. This requires a bit of knowhow, though, and you have to mail them in. Paper returns have proven to be a can of worms lately, so it’s not a bad idea to seek tax prep elsewhere.

Luckily, there are free options outside the IRS Free File program. TurboTax and H&R Block both offer free services for simple returns, though you should be careful clicking around: It’s easy to get upcharged. 

Is it too late to make my taxable income lower?

Actually, no. Taxpayers can make 2022 contributions to an individual retirement account, or IRA, until the April 18 deadline.

You’re able to contribute up to $6,000 ($7,000 if you’re 50 or older) to all of your IRAs for 2022. Some traditional IRA contributions are tax-deductible, so you may qualify to bring down your taxable income for 2022 — in turn, decreasing your tax burden.

I got a state stimulus check. Am I going to get taxed on it?

Probably not. For context, there was a bit of confusion in February when the IRS told millions of people who received state stimulus checks in 2022 to hold off on filing their taxes while it figured out how to handle them. Exciting!

Anyway, the IRS ultimately decided that the majority of folks who got these checks — also called rebates or inflation relief payments — don’t need to report them as income on their tax returns.

Speaking of drama, whatever happened with that Venmo $600 thing I vaguely remember hearing about?

Oooh. *rubs hands together* This is juicy.

Basically, the IRS spent all of last year talking about how it was making a major change in the reporting threshold for 1099-Ks, a form previously sent by third-party payment networks to small business owners and gig workers who earned over $20,000 in over 200 transactions a year. It swore it was going to lower that threshold to $600 for 2022, meaning tons of taxpayers would get 1099-Ks from providers like Venmo and Etsy and have to figure out how to use them to file their taxes this spring.

To be clear: At no point was the IRS going to snoop on your Venmo requests. The rule change would have targeted businesses, not personal transactions, but the policies weren’t clear enough, and everyone freaked out. The IRS realized it was going to be a snafu, so — the day before Christmas Eve! — it quietly decided to delay implementation of this rule to 2023. #newsdump

Anyway, it’s important to point out that “the legal requirement for reporting income has not changed,” per the IRS. Regardless of whether you get a form, you still have to tell the government about all your income.

Wait, all income?

Sorry. Yeah. Uncle Sam wants to know about all your taxable earnings, even if they come from bribes, jury duty, drug deals, March Madness pools, crypto airdrops or buried treasure.

I’m getting a refund. How long before I get paid?

Chill out. The IRS issues most refunds within 21 days of receiving your tax return. The fastest way to get your money is to file electronically and choose direct deposit as the delivery method.

If you’re anxious to get your cash, you are able to track your tax refund by using the IRS’s appropriately-named Where’s My Refund? tool. You’ll need to input your Social Security number, tax filing status and precise refund amount. The tool updates once a day, usually overnight, so there’s no need to check every hour or anything.

My refund seems smaller this year. Did I do something wrong?

Nah. Many Americans got used to big refund checks during the pandemic because of special tax credits designed to get them through the worst of the COVID-19 crisis. But 2022 saw most of those, including the expanded child tax credit, sunset. Hence lower refunds.

It’s not just you. The average refund amount is down 11% year over year, according to IRS filing statistics. At this time in 2022, the typical refund came out to $3,263; right now, it’s just $2,903.

It might be a bummer to get less money back, but financial experts say that getting a small refund is not technically a bad thing.

What if I need help with my taxes?

No sweat. There’s a ton of free tax help available, including from the IRS itself. If you make under $58,000, speak limited English or have a disability, check out the Volunteer Income Tax Assistance (VITA) program; if you’re 60 or older, look into the Tax Counseling for the Elderly (TCE) program. Separately, there’s AARP Foundation Tax-Aide, which provides assistance to anyone for free but focuses on taxpayers over 50 with low to moderate income.

If you’re looking at the calendar and thinking to yourself “there’s no way this is gonna get done,” you can request an extension on your taxes. But remember: This only gives you an extra six months to file. Anything you owe is still due on April 18.

See you next week.

P.S. Did you file your taxes yet? When was the last time you used a floppy disk? Would you pay for Twitter verification? Send Reese’s eggs to julia@money.com.

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