What Is Tax Season?
Gearing up for tax season can be… taxing. Tax season is the period within which all income taxes must be filed up until the deadline. Generally between Jan. 1 and April 15 of each year, tax season dates can vary if the filing date falls on a weekend or holiday, moving due dates to the next business day.
During tax season, employers, financial custodians, and other entities that generate income for individuals must provide documentation and statements for tax preparation purposes to ensure taxes are filed on time.
In the United States, individuals typically must file their annual tax return by April 15 of the year following the reportable earnings. Tax returns submitted after the end of tax season are subject to late penalty fees and interest charges. Individual taxpayers traditionally prepare financial statements and reports for the previous year and submit their tax returns. Individuals who are required to file a tax return must do so by April 15, but if for any reason they cannot file, they can request an extension.
In 2020, however, the deadline for filing and paying 2020 taxes was extended to July 15 due to the COVID-19 pandemic.
Additionally, businesses must furnish employees, contract laborers, and others, such as royalty earners, with tax documents specifying data required to complete an individual’s tax returns during tax season.
This season is a busy period for many tax preparers and accounting professionals. The three-and-a-half month period at the beginning of the year is the time when necessary paperwork, including wage and earnings statements (such as 1099s or W-2s), are collected to assemble tax returns. There are certain numbered tax filing forms for various types of taxes.
Before the commencement of the tax season, some individuals tend to collect all the necessary documentation prior to the filing season. They also rely on tax professionals to ensure paperwork is filed correctly. Tax professionals can also improve the financial outcome of the tax return.
It is strongly recommended to keep copies of prior-year tax returns for at least three years. In the event of an IRS audit, a taxpayer will be required to present the last three years of his or her documents and if there are suspicions of fraud, they are required to show seven years of documents.
Can you file a tax return earlier than the given date?
Even though many taxpayers file their tax returns on or by April 15 every year, there is no need to put it off until the last minute. Filing an early tax return can be positive for a variety of reasons:
- Starting your filing process early gives you the time you need to collect the proper evidence to claim all of your deductions.
- Filing early can help you avoid the headache associated with stress when trying to go over figures and receipts.
Tax Deductions and Credits to Consider for Tax Season 2021
Tax Deductions and Credits help you to keep more money from your income. It helps to lower how much of your income is subject to federal income taxes. Some deductions are available based on your documentation and other reasons.
Here are some deductions that can be claimed on a tax return:
- Earned Income Tax Credit
- Child Tax Credit
The Most Important Tips for Taxes:
- Avoid missing tax filing deadlines.
- If you’re unsure on how to file taxes, refer to professional agencies that deal with filing taxations.
- Start preparing for your taxes prior to the due actual date.
Important income tax dates for 2021:
January 10 2021
For employees who work for tips. If you received $20 or more in tips in December, you must report it to your employer using Form 4070. Tips should be reported on the 10th of every month throughout the year
January 15 2021
If tax is automatically deducted by your employer, you most likely don’t need to worry about this deadline. However, if you didn’t pay your income tax for the year 2019 through withholding (or didn’t pay in enough tax that way), you must use Form 1040ES.
For example, if you’re self-employed or a landlord, you need to pay your final installment for the year 2020. You don’t have to make this payment if you file your 2020 return Form 1040 or 1040-SR and pay any tax due by January 31, 2021.
January 31 2021
If you don’t pay your last installment of estimated tax by January 15, you may choose (but aren’t required) to file your income tax return (Form 1040 or Form 1040-SR) for 2020 by January 31. Filing your return and paying any tax due by January 31 prevents any penalty for late payment of the last installment.
This also applies to all businesses. Taxpayers must give annual information statements to recipients of certain payments they made during 2020. You can use the appropriate version of Form 1099 or other information return.
Form 1099 can be issued electronically with the consent of the recipient. The purpose of a 1099 form is to record income. All kinds of people can get a 1099 form for different reasons. For example, freelancers and independent contractors often get a 1099-MISC from their clients. The form reflects the money the client has paid the freelancer or independent contractor.
February 1, 2021
Section 6071(c) requires you to file Form 1099-NEC on or before February 1, 2021, using either paper or electronic filing procedures.
February 10 2021
If you worked for tips or received $20 or more in tips during the month of January, you should report them to your employer on IRS Form 4070 (Employee’s Report of Tips to Employer) by the above date.
February 18 2021
This is the deadline for individuals. If you claimed an exemption from income tax withholding last year on Form W4, Employee’s Withholding Allowance Certificate, you must file a new Form W4 by this date to continue your exemption for another year.
February 28 2021
Deadline for businesses to submit any other 1099 forms (1099-MISC, 1099-B, 1099-DIV, 1099-INT and etc.) and 1096, if filing on paper. These documents relate to business transactions that aren’t covered by W2 (anything that falls outside of tips and wages). If filing electronically, the deadline is March 31.
March 2 2021
This is the deadline for farmers and fishermen to file a 2020 income tax return (Form 1040) and pay any tax due. However, you have until April 15 to file if you paid your 2020 estimated tax by January 17, 2021.
March 10 2021
Employees Who Work for Tips. If you received $20 or more in tips during the month of February, you should report them to your employer. Use IRS Form 4070 (Employee’s Report of Tips to Employer).
March 15 2021
Forms 1042-S, whether filed on paper or electronically, must be filed with the IRS by March 15, 2021. You also must furnish Form 1042-S to the recipient of the income by March 15, 2021.
March 16 2021
Deadline for corporate tax returns. Corporations who use the calendar year as their tax year (i.e. their deadlines don’t straddle 2019 and 2020) are eligible for a 6 month extension but must apply for it by this date.
March 31 2021
Deadline for electronic Filing of Forms 1097, 1098, 1099 (not including 1099-NEC), 3921, 3922, and W-2GS. This date applies only if you file these forms electronically.
April 10 2021
Employees Who Work for Tips: If you got $20 or more in tips during the month of March, you should report them to your employer using IRS Form 4070
April 15 2021
Last day to file an original or amended tax return from 2017 and claim a rebate unless you have an extension, then the new date is October 15, 2021.
File a 2020 income tax return (Form 1040-SR) and pay any tax due.
Form 1040 is used by U.S. taxpayers to file an annual income tax return.
Using form 1040 or 1040-SR can report the following:
- The sale or exchange of a capital asset not reported on another form
- Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit
- Capital gain distributions not reported directly on Form 1040
- Nonbusiness bad debts