So you will be subject to capital gains tax when you sell them. To make matters more confusing, using them to buy something technically counts as selling. Virtual currencies are taxed as property, or as an investment, when you sell them. Just buying and holding cryptocurrencies are not taxable events.īut if you sold cryptocurrencies, used them to buy something or were paid in crypto, those are taxable events and must be reported. And for very low-income taxpayers who didn’t receive any payment, filing a return now is your chance to claim it. The same goes for anyone who had a child last year. Taxpayers who earned less in 2021 than 2020 may be eligible for more money. That will cause delays in processing your return and issuing your refund.Īnd you’ll want to use that number to work out whether the IRS actually owes you more by way of a recovery rebate credit, once you calculate how much more of the stimulus payment you’re due on the basis of your actual 2021 income. The last thing you want is for there to be a discrepancy between the IRS records and what’s on your return. While the payment isn’t taxable, you should report the number from that letter on your 2021 return. The IRS recently mailed Letter 6475 to taxpayers who received a third round stimulus payment, which the agency started sending out in March 2021. I got an IRS letter saying it sent me a stimulus check. And then you will have to claim the other half of the credit you’re owed, which you will get by way of a refund. That’s an amount you will need to report on your return. You should have gotten a letter from the IRS in the past couple of months detailing what you’ve been paid already. It was also temporarily made fully refundable for 2021, meaning you can get the maximum amount of the credit even if it exceeds your federal income tax liability.īut here’s where the real confusion comes in: The IRS likely has already sent you half the credit you’re entitled to (six months’ worth) through monthly checks sent out between July and December. For starters, it was raised to $3,600 per child ages 5 and under, and to $3,000 per child ages 6 through 17. There were a lot of temporary changes made to the child tax credit just for 2021. The child tax credit is causing headaches for both filers and tax pros alike. How should I handle that on my tax return? The advanced child tax credit is so confusing. If you worked from a state other than the one where your employer is based, you could be subject to the income tax rules of two or more states.Īt the very least you’ll likely have to file more than one state tax return for 2021, which will cost you more if you’re paying someone else to prepare your taxes.Īnd in some instances – primarily involving five states that have so-called convenience rules – you may even be double-taxed on the same income. You can check the status of where things stand by using the IRS online tool Where’s My Refund? If you file an accurate return electronically, and are owed a refund, the IRS will likely have that money sent to you or direct deposited into your bank account within 21 days of receiving your return. If that’s not possible and you’re really behind, you may be able to set up a repayment plan with the IRS. To show that, try to pay what you can when you file, even if it’s not the total balance. At a minimum, you need to show that your failure to pay is not the result of “ willful neglect.” If the IRS accepts your explanation, it may waive the late payment penalty.
If you really can’t afford to pay on time, and you have a good reason for why, you can make your case to the IRS by attaching a statement to your return when you file. You will have to pay even more than you owe, because you’ll be slapped with penalties and interest. taxpayers living outside of the United States on April 18.įor most people, you have to pay any remaining 2021 income taxes that you still owe by the April 18 filing deadline, even if you get an automatic six-month extension to file. And the deadline is a month or more later for people living in federally declared disaster areas, as well as U.S. They include residents of Maine and Massachusetts, whose official filing date is April 19.
Of course, there are some taxpayers whose filing deadline is later than April 18. But if that proves difficult – or you’re just not in the mood – file for an automatic six-month extension by using Form 4868. If you haven’t filed yet, here are answers to some key questions that will help you through the process: Nevertheless, the IRS still expects you to file your 2021 return and pay whatever you still owe by the filing deadline, which is April 18 for most taxpayers.
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