Taxes 2022: What to do if you haven’t filed your return yet
TurboTax Tax Expert Lisa Greene-Lewis sits down with Yahoo Finance Live to talk about what last-minute taxpayers need to remember when filing by tonight's deadline, extensions and tax credits, and tax laws for gig workers and online vendors.
Video Transcript
RACHELLE AKUFFO: --everyone. According to a poll by IPX 1031, 56% of Americans don't know when this year's tax deadline is. Well, surprise, it's today. Well, joining me now to help last-minute filers get through this season is Lisa Greene-Lewis, TurboTax CPA. Thank you for joining me. So typically--
LISA GREENE-LEWIS: Thank you for having me.
RACHELLE AKUFFO: Of course. So typically, what share of Americans don't file their taxes by the deadline, and why?
LISA GREENE-LEWIS: Typically, there's several reasons. You have your usual procrastinators every year that just wait, whether they're getting a tax refund or not. And then this year, as you said, a lot of people were unclear about when the actual tax deadline is. And as you said, it is tonight by 11:59. So I think there were just some people that weren't sure about the deadline.
RACHELLE AKUFFO: And especially since it did fall around this holiday weekend. So for people who did not file today or don't think they can file today, what should their next steps be?
LISA GREENE-LEWIS: Yes, next steps, by 11:59 tonight, you want to file Form 4868 to file for an extension. And then, you know, even if you're waiting to find out one answer to something, you can still file as soon as possible tomorrow, but you want to file that extension so that you avoid a failure to file penalty. And then if you owe money, you need to pay 90% of what you owe by tonight's deadline.
RACHELLE AKUFFO: So then what do people need to know about the extent-- the difference between the extension to pay versus the extension to file?
LISA GREENE-LEWIS: So the extension to file, you know, that's one thing to point out. It is not an extension to pay. It's an extension of file until October 17th this year. And then you don't get an extension to pay. So you have to pay 90% of what you owe. If you can't pay that, the IRS has other options. You can get an installment agreement that allows you to pay what you owe over six years.
RACHELLE AKUFFO: So if you're right up against the deadline, what is the best way? What are some of the steps you can take to try and avoid getting audited?
LISA GREENE-LEWIS: The best thing you could do-- first thing to point out, less than 1% of people are audited. So, you know, don't worry about that. But you do need to just gather all your documents in one place. You want to have a complete return before you file. So you want to include those forms that reports your income, like your 1099 forms, W-2s, and then also, don't forget about receipts for expenses. They can be worth valuable deductions.
And then especially this year, millions of people received the advanced child tax credit. You want to make sure you have a new letter from the IRS. It's letter 6419. You need to report the correct amount of advanced payments that you received so you don't have any delays with your return or any adjustments in your refund. And then same with stimulus. There was the third stimulus, and the IRS issued 64-- letter 6475. You want to have that in front of you and report the correct amount of third stimulus that you received.
RACHELLE AKUFFO: And obviously, the past year, because of the pandemic, a lot of people-- a lot of moving parts there. So if you've changed jobs or became unemployed over the past year, what should be on your checklist there?
LISA GREENE-LEWIS: Yes, if you changed jobs or had unemployment, one thing to remember, in tax year 2020, there was a break, and your first $10,200 of unemployment income was not taxable. That did not carry forward into tax year 2021. So I would just remember that. But also, think about all the new credits that came about under the American Rescue Plan.
You know, there was expanded child tax credit, expanded child and dependent care credit, and also the earned income tax credit was extended. And if you experience unemployment or changes in your income, you may be eligible for the Earned Income Tax Credit, where you weren't before. And that's a huge credit. It's worth $6,728 for a family with three kids.
RACHELLE AKUFFO: And obviously, a lot of people wondering the big question, when can they expect their refunds, depending on how they filed, especially given the IRS backlog, which does seem to be easing somewhat based on the data on their website.
LISA GREENE-LEWIS: Yes, so if you e-file with direct deposit, that's the fastest way to get your tax refund. And the IRS states that they will issue 9 out of 10 tax refunds within 21 days or less if you e-file a direct deposit.
RACHELLE AKUFFO: Now, I do want to throw it forward here because starting this year, platforms, including eBay, Etsy, Airbnb, Venmo, and Uber have to send a 1099 K form to the IRS to report an individual's total revenue if they earned more than $600. Now this is a much lower bar previously than the 20,000 and 200 transactions requirement that was previously needed. How can people start preparing for next year's changes now?
LISA GREENE-LEWIS: Yes, I would definitely start tracking the income that you're earning on those third party providers, but also don't forget that the expenses that you're paying on those third party providers. But you want to start tracking because as you said, the reporting requirements for those payers has dropped from the 200 transactions and $20,000 down to $600.
RACHELLE AKUFFO: All right, lots of things to be aware of, but remember, 11:59, everyone, so try and get those in if you can. A big thank you there to Lisa Greene-Lewis, TurboTax CPA. Thanks so much.
