Doing taxes is nobody's idea of a good time, but according to NBC senior business correspondent Stephanie Ruhle, there's no time like the present to prepare and file those documents. Ruhle shared her best advice and tips for getting the biggest refund possible — in the most timely manner — and what to do if you run into problems.
What's the deadline for 2021 taxes?
The deadline for filing your 2021 taxes is April 18 and unlike in the past years during the pandemic, Ruhle said not to expect an extension. "Just do it," she said.
If you think you're due a refund, the best course of action is to file your taxes electronically. "The sooner you file, the sooner you're getting that money," she explained.
"The IRS estimates that it takes about three weeks to receive a refund, and filing electronically and signing up for direct deposit can help speed up the process," Kimberly Palmer, a personal finance expert at NerdWallet told TODAY.
What if I can't pay my 2021 tax bill?
Worried you'll owe money? Not having the funds to pay your tax bill is no reason to put off filing. You can set up a payment plan with the IRS and even file for an extension if that's your best option.
"If you are unable to meet the tax deadline of April 18 this year, then it’s important to file for an extension to avoid potential penalties," Palmer said. "The good news is that some people qualify for extensions automatically without filing for an extension. You might fall into this category if you are currently outside of the country, if you’ve been impacted by certain qualifying natural disasters or if you're a soldier serving in combat areas."
Otherwise, Palmer says you can request an extension for an additional six months, but you must pay any taxes that you owe by the April deadline, even if you're granted an extension. "Still, it gives you more time to collect your paperwork and fill out all of the forms," she said.
How do I set up a payment plan for my 2021 taxes?
If you can’t pay your taxes you can set up a payment plan with the IRS. "If you can pay it all within 120 days, then you can qualify for a short-term payment agreement, which carries no fee but you do pay interest," said Palmer. "If you need more than 120 days, then you likely have to pay a fee to set up a longer-term payment agreement, along with interest." To apply for a payment plan, you can go to the IRS website’s online payment plan application and submit your information.
What about stimulus payments, child tax credits and unemployment?
Ruhle said that if you were due a stimulus payment but didn't receive it, it's important to file for that when you do your taxes.
"If you were owed a child tax credit and didn't get it you can also put that in your taxes for a credit," she said.
Palmer explained that there has been a lot of confusion around the stimulus payments and child tax credits this year. "The important thing to know is that the child tax credits are advance credits — that means you don’t pay taxes on the money received but you do have to account for it and reconcile any discrepancies between what was paid and what was owed," she said.
One important change is regarding unemployment benefits. Ruhle said that two years ago, due to the pandemic, if you received unemployment you didn't have to pay taxes on it. This year, you do.
What do I need to do my taxes?
When you sit down to do your taxes, make sure you have all your documents together in one place as you don't want to be searching for information once you've started. "Get your W-2, get your W-9," Ruhle said. "Any account that you have that you earned interest on this year, any of your charitable deductions, put it all in one place and let's get started."
The next thing to do is to decide is if you're going to itemize or take the standard deduction. Thus year, the standard deduction has increased to $12,550 for single filers, $18,800 for heads of households and $25,100 for married couples filing jointly.
Depending on your income, you may be eligible for Free File, a cost-free tax preparation and electronic filing system from the IRS. Visit IRS.gov to see if you qualify for this service.
Consider these major life changes
Any changes you and your family went through in the past year could result in bigger deductions on your taxes. Did you get married? If so, consider filing jointly as a married couple. If you do this, make sure to have those important though sometimes difficult money conversations beforehand.
"If you are filing as a couple, make sure your partner is being honest because you are signing off on that to the government," said Ruhle.
If you had a baby, congratulations, that means you're also getting the child tax credit. "Plus, if you had a baby, you might be eligible for more stimulus money," Ruhle aid.
How to get help with your taxes
If you have questions about your tax return, you might be able to find the answers online as the IRS offers comprehensive FAQs for taxpayers. "You can also use online tax software to help you navigate the process or, if your situation is really complex, you can turn to a tax professional," said Palmer.
Whatever you do, don't put off doing those taxes.
"If you miss a tax deadline, then you can get hit with penalties and even interest on any taxes owed," Palmer said. "In fact, the late-filing penalty is 5% of the amount due for every month or partial month you’re late."
For more tips, visit IRS.gov and On the Money TODAY with Stephanie Ruhle.
