IRS will shut down individual tax return e-filing starting 11/26/2022
As we move into the 2022 tax filing season, there are some things to know if your 2021 return hasn’t been filed yet. It is important to get this handled before moving on to 2023.
If you haven't filed
If you haven’t filed a previous year's tax return, you will not be able to electronically file it for several months even if you engage a registered tax preparer who has the ability to e-file prior year tax returns.
Each year around mid to late November, the IRS stops accepting delinquent tax return electronic filings in order to prepare for the upcoming tax year filing season. For 2022, November 26th is the day the system shutdown starts. The reopening date has not yet been announced. In the past, it would resume around late January or early February of the following year.
During the shutdown period, you will not be able to e-file your individual tax return so you can only file it on paper. Paper filing tax returns is absolutely not favorable for taxpayers as it can take many months or even a few years for the IRS to process tax returns manually.
Without having your tax return filed and processed on time, your applications that require verification through the IRS database will fail to pass, such as applications for financial assistance for higher education or mortgage.
Be aware of the deadline
If your 2019 tax return has not been filed, 11/26/2022 is the deadline for it to be e-filed. 2020 and 2021 past-due tax returns can still be e-filed in 2023.
We strongly recommend having your past-due tax return filed electronically before 11/26/2022 to avoid the delay in processing.
The state of New Jersey can deny your tax extension
One concept that confuses many filers is tax extensions. If you think a tax extension can extend the deadline for you to pay your income taxes, you are wrong, unfortunately. An extension just allows you to file your tax return later, but the payment for tax liability remains as the original due date.
Moreover, in the state of New Jersey, with an extension filed if the tax payment was not made before the original due date, the extension is invalidated by the state for the lack of payment. Therefore the state will penalize you for both late filing and late payment.
Take your taxes seriously
If you live and work in New Jersey, please take the original tax deadline very seriously. Making sufficient estimated tax payments by the deadline can save you two big penalties. On the contrary, knowing you owe New Jersey state tax and still filing an extension without payment does not get you an extension for anything.
Charges for late payments
How does the state of New Jersey charge for late tax payments and filing?
- The late filing penalty is 5% of the tax due for each month the return is late, up to 25% of your unpaid taxes.
- The late interest rate is calculated as the prime rate plus 3%.
- The late payment penalty is 5% of the tax due.
Work with a professional accountant
When you have a professional accountant on your team, it's best to get them involved. Highly skilled and experienced accountants can explain the notice to you and resolve the issue for you as long as you are not financially insolvent. Do not try to verbally tell them what the notice is about as important information can get lost in translation. The most efficient way is forwarding the notice to them. Let the professional do what they are good at, which is reviewing and analyzing the information. Ultimately they can provide you with the service you need to get the issue resolved and behind you.
HOW SCHWARTZ IS HELPING SOUTH JERSEY SMALL BUSINESS OWNERS
Navigating these legal changes and what it means for your small business in New Jersey can be one of the biggest challenges you face in the coming years. Fortunately, Schwartz & Associates is already familiar with relevant tax laws and regulations you need to comply with, including the impact of the Biden Administration's new tax proposals. The American Families Plan (AFP) and American Jobs Plan (AJP) will bring with them new taxes on businesses in the coming year, and Schwartz is prepared to ensure your South Jersey business is not only in compliance but maximizing its benefits.
Contact us for more insight into what these changes may mean for your business specifically and what we can do to ensure you're getting the most out of your deductions.