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Here’s What You Need to Know About the Upcoming Tax Season

Jan. 20, 2022, 9:45 AM

While I know that many of my fellow tax professionals would argue that tax season never officially ended last year, we’re already gearing up for the new tax filing season. Here’s what you need to know.

Tax Season Opens Soon

The IRS has announced that tax season will open Monday, January 24, 2022.

Some folks have suggested that a January start date is early—but I’m guessing they have a short memory. It’s true that tax season opened a little later in 2021—on February 12, 2021—but that’s an outlier due to the pandemic. The January 24, 2022, tax season open is on par with the open dates for the past few years—Jan. 27 in 2020, Jan. 28 in 2019, and Jan. 29 in 2018. In fact, other than last year, the agency has opened tax season in late January for more than a decade.

Free File is Open

Free File opened for business January 14, 2022. The program—which is what it sounds like—allows taxpayers with an Adjusted Gross Income (or AGI) of $73,000 or less in 2021 to file their taxes electronically for free using software provided by commercial tax filing companies.

You can find your AGI on line 11 on your Form 1040. The amount includes income, less adjustments, and is calculated before claiming the standard or itemized deductions. Statistically, most taxpayers are eligible for Free File.

You can do your taxes now if you use Free File, even though the filing season hasn’t yet opened. Click over to IRS.gov/freefile to see the Free File options. The Free File provider you choose will submit your return once the IRS officially opens tax season and starts processing tax returns.

Not every Free File partner has the same eligibility criteria—it can vary based on income, age, and state residency. Additionally, some but not all Free File partners offer free prep and filing for state returns. Check the fine print before you start your return since any state preparation or non-qualifying fees are required to be disclosed on the company’s Free File landing page.

You can only file your current year tax return—the 2021 tax year—using IRS Free File. You cannot process a prior year return using IRS Free File.

Filing Early

Free File isn’t the only service opening early. Many commercial tax preparation software companies and tax professionals also will accept and prepare tax returns before Jan. 24. They typically will submit the returns when the IRS systems open.

Filing Deadlines

The filing deadline to submit 2021 tax returns is Monday, April 18, 2022, for most taxpayers. That feels confusing since April 15 is a Friday—no skips, right?

Don’t forget about Emancipation Day. A public holiday in the District of Colombia since 2005, it marks the date—April 16, 1862—that President Abraham Lincoln signed the District of Columbia Compensated Emancipation Act, freeing nearly 3,000 enslaved people in the District months before the Emancipation Proclamation. By law, when April 16 falls during a weekend, Emancipation Day is celebrated on the nearest weekday—not necessarily the following weekday. That means, in 2022, Emancipation Day will be observed Friday, April 15, so Tax Day gets pushed ahead to the next business day, which is Monday, April 18, 2022.

As if that isn’t confusing enough, taxpayers in Maine or Massachusetts get an extra day. Taxpayers in those states have until April 19, 2022, to file due to the Patriots’ Day holiday in those states.

All taxpayers who timely request an extension will have until Monday, October 17, 2022, to file. Remember, however, that an extension gives you extra time to file—but not extra time to pay.

The IRS says it anticipates more than 160 million individual tax returns to be filed for the 2021 tax year, most coming before the April 18 deadline.

Still Waiting?

According to the National Taxpayer Advocate, the agency still was trying to catch up before the last tax season even started, carrying over approximately 11.7 million returns from 2020.

The IRS did not finish processing 2019 returns until midyear—of 2021. Add paper returns, amended returns, and returns flagged for errors due to Recovery Rebate Credit (RRC) claims, and you had a recipe for disaster. This month, the advocate reported to Congress that “manual reviews will take substantial time, preventing the IRS from digging out of that hole in the foreseeable future.”

Even if your 2020 tax return has not yet been processed—like mine—Tax Day is still April 18, 2022. The IRS notes that taxpayers generally will not need to wait for their 2020 return to be processed to file their 2021 tax returns.

Be Patient

I know—you’ve heard that before. But it’s true again this year.

We already know that the IRS isn’t answering the phone. IRS Commissioner Chuck Rettig encourages taxpayers to check IRS.gov rather than calling, saying, “We have invested in developing new online capacities to make this a quick and easy way for taxpayers to get the information they need.”

Rettig is referring to online services at irs.gov, including:

The IRS also encourages taxpayers to file electronically with direct deposit and avoid filing paper returns wherever possible.

The IRS says it expects it will take around 21 days for most taxpayers who file electronically to see their refund, assuming there are no issues with their tax return. The agency stopped short this year of their often-repeated statistic that “the IRS anticipates nine out of 10 taxpayers will receive their refund within 21 days of when they file electronically.”

Don’t forget that the law requires the IRS to hold refunds tied to the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until February 15. That extra time allows the IRS to match information from forms W-2 and 1099 with data reported on tax returns; in prior years, refunds could be issued before records were checked, increasing the likelihood of fraud. The hold, together with bank processing times and bank holidays, means that taxpayers should not count on seeing those tax refunds until the first week of March. The rule applies to the entire refund—even the portion not associated with the EITC and ACTC.

Another Extension?

While there has been a lot of discussion online about a further filing date extension in 2022—similar to those issued in 2020 and 2021—so far, that’s just talk. If that changes, I’ll let you know.

This is a weekly column from Kelly Phillips Erb, the Taxgirl. Erb offers commentary on the latest in tax news, tax law, and tax policy. Look for Erb’s column every week from Bloomberg Tax and follow her on Twitter at @taxgirl.

To contact the reporter on this story: Kelly Phillips Erb in Washington at kerb@bloombergindustry.com

To contact the editors responsible for this story: Rachael Daigle at rdaigle@bloombergindustry.com; Meg Shreve at mshreve@bloombergindustry.com