What Is Tax Season?
Tax season is the time period, generally between Jan. 1 and April 15 of each year, when individual taxpayers traditionally prepare financial statements and reports for the previous year and submit their tax returns.
The IRS has extended the 2020 federal tax filing date for individuals until May 17, 2021, due to the coronavirus pandemic—versus the previous deadline of April 15, 2021. As well, due to the winter storms that hit Texas, Oklahoma, and Louisiana in February, the IRS has extended the 2020 federal individual and business tax filing deadline for those states to June 15, 2021.
In the U.S., individuals typically must file their annual tax return by April 15 of the year following any reportable earnings. Tax returns submitted after the end of tax season are subject to late penalty fees and interest charges.
- Tax season is the time period within which individuals and businesses prepare and file their income taxes.
- In the United States, tax season is typically Jan. 1 until the April 15 filing deadline.
- 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.
How To Calculate The Tax You Owe
Understanding Tax Season
Tax season is the period within which all income taxes must be filed up until the deadline. The deadline each year is typically 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.
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 before 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 who makes $72,000 or less can file taxes for free through the Internal Revenue Service (IRS) Free File program. Individuals must file federal, state, and, in some cases, local tax returns.
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 their documents. In extreme cases, such as suspicion of fraud, they will be expected to show seven years of documents.
According to the IRS, a taxpayer with gross income (all income from all sources) of more than $12,000 will have to pay federal tax. Independent contractors, or what the IRS refers to as "non-employee compensation," must file a return and pay self-employment taxes on any net earnings from self-employment of $400 or more.
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.
Why Filing Early Can Make Sense
Even though many taxpayers file their tax returns on or by about April 15 every year, there is no need to put it off until the last minute. Indeed, filing an early tax return can make sense for a variety of reasons.
The IRS will begin processing tax returns for the 2020 tax year on Feb. 12, 2021. Even if you don't file early, there are reasons to begin preparation as soon as you can.
Starting your filing process early gives you the time you need to collect the evidence needed to claim all of your deductions. You will avoid the headache of the middle of the night stress over figures and receipts. Your accountant will have a more flexible schedule and will probably be able to start working on your accounts immediately. Also, by filing early, you will short circuit would-be identity thieves.