What and When is the Tax Calendar Year?

 

The term “tax year” may seem simple, but it actually causes a lot of confusion for a lot of people. However, if you put in a little effort to properly understand what it is and when it occurs, you can save yourself a lot of hassle.   

It Really is a Calendar Year . . .  

First of all, know that the tax year really is just a standard calendar year, at least for most people. Just like the regular year, it runs from January 1st to December 31st. The only difference is that, when you file on your tax deadline, you’re filing for the previous year. So, when you file in 2021, for example, you’re actually filing your 2020 taxes, which makes sense because 2021 isn’t even halfway over at that point!  

But It Doesn’t Necessarily Have to Be  

While most taxpayers will file and pay their taxes based on the calendar year, you don’t necessarily have to do it that way. If you prefer, you can file using the fiscal year formula. In this situation, your fiscal year can end on the last day of any month except December since that day reflects the calendar year formula.  

Organizations—this option is not generally used by individual taxpayers—have various reasons for using the fiscal year formula. If you think it could be right for you, you’ll need to talk the option over with a tax professional, and you’ll also need to go through the required steps to get approval from the IRS for filing your taxes this way.  

The Rules Do Change  

Hopefully, some of your confusion over what constitutes a “tax year” has been cleared up. But, there are still a few other things to understand. For one, know that tax rules do change from year to year, and you’ll need to keep the most current set of rules in mind when you file your annual taxes.  

For this reason, it’s highly advisable to use tax software that’s up to date and that can factor in changes for you or, even better yet, to work with a professional accountant who knows the ins and outs of tax laws and the most recent changes to these laws.  

Yes, taxation can be confusing. But, taxes aren’t something that ever go away, so you must do your best to regularly educate yourself and to seek the right help when necessary. After all, calendar year after calendar year (or fiscal year after fiscal year, as the case may be), you’ll have to keep right on filing no matter what!

Filing Your Taxes at the Last Minute

Most of us know when the tax deadline is coming close. However, that doesn’t always stop us from filing at the last minute or, even worse, filing late. If you’re one of those “last minute” filers, no matter what the reason, there are some tips you can follow to get through the process as easily and as efficiently as possible.   

Consider E-Filing

One of the easiest and fastest options for getting your taxes taken care of is choosing to file online, a process known as e-filing.

E-filing is very easy and takes only a few minutes of your time. Plus, it even allows you to get your tax returns more quickly. There’s also the added benefit of not having to do the math yourself and not having to pay for postage or go to the post office.

If you want to get your taxes done with as little hassle as possible, choose a good online program and get to e-filing!

File Even if You Can’t Pay

Sometimes, people are tempted to put off filing until the last minute because they know they’ll owe money, money they don’t have. Some people will even avoid filing entirely.

Neither of these things are doing you any favors. Even if you don’t have the money, go ahead and file your taxes. You can also submit a partial payment to at least show the IRS you’re making an effort.

From there, you may be able to work out an installment agreement or other options to get your taxes paid. You’ll avoid late filing penalties and interest as well, which is why it’s always good to file on time.

The bottom line is that, whenever possible, you should try to file your taxes early on. That way, you’ll have plenty of time to check and double-check everything and to ensure you’re getting all available deductions and credits. If that’s not possible, then follow these tips to get through the process quickly and with less stress.

What You Need to Know About Filing Taxes Late

Sometimes, those tax deadlines just have a way of sneaking up on you. When that happens, you may have no choice but to file your taxes late. While this is something you should try to avoid at all costs, it’s not the end of the world if you do file late. The most important thing is simply that you do file. However, when filing late, there are a few things you should be aware of.   

You Might Miss Out

Unfortunately, filing taxes late does sometimes have consequences, and one of those consequences is that you might miss out on refunds and tax credits.

If you’re due a withholding refund or a refund for estimated taxes paid, you are required to claim it within three years of the return due date. Once that time elapses, that refund or credit is gone, never to be seen again!

You Should File Even if You Can’t Pay

Sometimes, people file their taxes late on purpose. The most common reason for this is because they know they’ll owe money, and they can’t afford to pay it.

If you find yourself in this situation, go ahead and file. That way, you won’t owe taxes on top of a late filing and/or failure to file penalty.

Often, you can work out a payment plan or pursue other options with the IRS to pay your taxes.

Your Taxes Might Still Get Filed

If you make late filing or failing to file a habit, the IRS might just take matters into their own hands. In some cases, IRS employees will prepare returns for you, and these returns often don’t include deductions and credits which could help you to owe less. What’s more is you’ll typically have to pay penalties and interest as well.

As you can see, filing on time is always in your best interest. If you’re worried about meeting the deadline or have other questions related to filing, be sure to seek help from a qualified tax professional.