Loading the player...

DEFINITION of 'Tax Season'

Tax season is the time period between January 1 and April 15 of each year when ndividual taxpayers traditionally prepare financial statements and reports for the previous year. In the United States, individuals must file their annual tax return by April 15 of the year following the reportable earnings.

BREAKING DOWN 'Tax Season'

During tax season, 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. People who are required to file a tax return must do so by April 15 or request an extension.

Tax 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 the necessary paperwork, including wage and earnings statements (such as 1099s or W-2s) is collected to assemble tax returns. While some individuals calculate their own tax returns, many rely on the expertise of tax preparers and accounting professionals to be certain the paperwork is filed correctly and to improve the financial outcome of the tax return. An individual that makes less than $66,000 a year can file his or taxes for free on the IRS website. Individuals must file federal, state and, in some cases, local tax returns.

The tax season is the period within which all taxes must be filed up until the deadline. The deadline each year is set on April 15. However, if this date falls on a weekend or holiday, it is moved to the next business day. For instance, April 15, 2018 fell on a Sunday, and Monday April 16 was a holiday – Emancipation Day. Therefore, taxpayers had until Tuesday April 17, 2018 to file their 2017 tax returns and to pay any taxes due. Tax returns submitted after this date are subject to late penalty fees.

According to the Internal Revenue Service (IRS), a taxpayer with gross income (all income from all sources) of more than $10,000 will have to pay federal tax. For independent contractors, or what the IRS refers to as “non-employee compensation,” taxes on any earnings over $600 must be paid. Employers must provide employees with a W-2 at some point in January. Businesses that hire independent contractors will have to give them their 1099-MISC by a certain date, which will include information regarding non-employee income.

The IRS advises that all taxpayers keep copies of their 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. In extreme cases, such as suspicion of fraud, s/he will be expected to show seven years of documents.

RELATED TERMS
  1. Tax Year

    Tax year refers to the 12-month period covered by a taxpayer's ...
  2. Tax Break

    A tax break is a savings on a taxpayer's liability. It is also ...
  3. Amended Return

    An amended return is a return filed in order to make corrections ...
  4. Effective Tax Rate

    The effective tax rate is the average rate at which an individual ...
  5. Tax Advisor

    The services of tax advisors are usually retained in order to ...
  6. Proportional Tax

    A proportional tax is an income tax system that requires the ...
Related Articles
  1. Personal Finance

    3 Common Tax Questions Answered

    We clarify some rules that often puzzle taxpayers.
  2. Taxes

    Why Your Taxes Are Due on April 17 This Year

    Your taxes are always due April 15th. Except when they’re not.
  3. Taxes

    Get a 6-Month Tax Extension

    Discover how to get some extra time from the IRS, without paying a hefty penalty for the privilege.
  4. Taxes

    Choosing A Tax Preparer

    There are many people and companies that can file your taxes. Find out what each has to offer, and which is right for you.
  5. Taxes

    Millions Wait to the Last Minute to File Their Taxes

    Online filing encourages procrastination. Millennials are most likely to leave filing till last day
  6. Taxes

    The History of Taxes in the U.S.

    America's first citizens enjoyed few to no taxes. Then taxes were added, increased and occasionally repealed to give us our current tax regime.
  7. Taxes

    Form 9465: Don't Pay Your Back Taxes Without It

    This form can lighten your tax load if you owe Uncle Sam. And you can often apply online.
  8. Taxes

    Why People Don't Lie On Their Tax Returns

    Studies show people are overwhelmingly truthful when it comes to their tax filing, even when lying would benefit them.
  9. Taxes

    Don't Stress This Tax Season, Prepare Instead

    Follow these strategies to help reduce tax-deadline stress for you and your CPA.
  10. Financial Advisor

    3 Federal Income Tax Facts You Didn't Know

    Learn about three federal income tax facts that most Americans may not know from one of the most trusted financial resources on the Web.
Trading Center