It's not a favorite day for many taxpayers: Americans can begin filing their taxes with the IRS starting today through Apr. 18.
It's unclear at this point whether or not the IRS will extend the deadline, but some states have already announced different deadlines for their own state individual income taxes. Maine and Massachusetts residents have until Apr. 19 to file their federal income taxes due to Patriots' Day, a holiday in both states.
But regardless of which state you reside in, there are several things you should know about filing your taxes this year. Select interviewed Eric Bronnenkant, head of tax at Betterment, to find out what Americans should keep in mind as they prepare to file their taxes for 2021.
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What to keep in mind for filing taxes in 2022
1. Security should be a top concern
Identity theft is a major issue, especially around tax time. Not only can someone compromise your identity by stealing your credit card info, they can also file an illicit tax return in your name — with the hopes of grabbing your return before you even realize.
The best way to avoid this situation is to file your tax return as early as possible. However, Bronnenkant suggests also using the Identity Protection Pin program offered by the IRS.
This program will give you a unique pin code to file your tax return with to verify someone isn't using your info. The process takes a few minutes to sign-up, but its free and easy to use.
Bronnenkant told Select that "everyone should use it."
If you want additional protection, using an identity theft monitoring service can help you catch fraud quickly. Select ranked IdentityForce® as the overall best program for its identity theft insurance up to $1 million and certified identity restoration experts who assist consumers with all of the necessary paperwork and phone calls if they discover their identity has been compromised by criminals in an IRS tax fraud scam.
IdentityForce®
Cost
UltraSecure+Credit Individual starts at $139.90/yr and UltraSecure+Credit Family at $209/yr. Click "Learn More" for details.
Identity theft insurance
Yes, $1 million for all plans
Credit monitoring
The UltraSecure+Credit monitors your Experian, Equifax and TransUnion credit reports; UltraSecure doesn't offer credit monitoring.
Mobile app
Yes
Family plan
Yes
See our methodology, terms apply. To learn more about IdentityForce®, visit their website or call 855-979-1118.
Pros
- All plans provide $1 million identity theft insurance
- Option to choose between UltraSecure and UltraSecure+Credit plans
Cons
- UltraSecure doesn't offer triple-bureau credit monitoring
2. Make sure your numbers match up
Organization is a very important part of filing your taxes, as one small error could lead to an audit.
Specifically, credits like the Child Tax Credit will likely lead to many Americans potentially claiming more than they should.
Bronnenkant gave the example where someone may have been receiving Child Tax Credit payments throughout the year (or an entire lump sum). He warns that Americans shouldn't be claiming this credit twice. For example, if a tax payer has already received their full $3,000 credit, they shouldn't be claiming anything on their return. Or, if they've received only $1,000, that they should only claim the remainder of the funds due to them.
If you happen to overclaim how much you are owed, Bronnenkant warned you could owe that money back to the IRS.
3. Using tax software may be your best bet
With so many changes to the tax code each year, it can be worth it to use a tax software service like H&R Block or TurboTax.
These software services can save you time and money when filing out your tax return, plus help you avoid making a mistake that could cause headaches, and potentially even fines, from the IRS.
Also keep in mind there are free alternatives to file your taxes. If you made $73,000 or less in 2021, you can file your taxes for free using the IRS's Free File program. Additionally, there are plenty of resources and discounted tax filing services for college students.
H&R Block
Cost
Costs may vary depending on the plan selected - see breakdown by plan in the description below
Free version
Yes (for simple returns only)
Mobile app
Yes
Live support
Yes, costs extra
Terms apply, see below for our methodology.
Pros
- Simple step-by-step guidance that's easy to follow
- Unlimited on-demand chat or video support with Online Assist plans
- Ability to speak to a tax expert who has an average of 10 years experience (costs extra)
- Over 11,000 physical locations so you can meet with a tax expert in-person
- Maximum refund guarantee, or H&R Block will refund the plan fees you paid
- Audit support guarantee, which provides free assistance if you get an IRS or other tax notice
- 100% accuracy, or H&R Block will reimburse you for any penalties or interest up to $10,000
Cons
- Plans that include speaking with a live tax expert start at $69.99 for federal, plus additional state fee
- One of the more costly software programs
Cost breakdown by plan:
- Free (for simple returns): $0 federal, $0 per state
- Deluxe (helps you maximize credits and deductions): $44 federal, $45 per state
- Premium (includes returns with investments and expenses): $60 federal, $45 per state
- Self-employed (for personal and business income and expenses): $92 federal, $45 per state
File with a tax pro:
- Virtual (includes help from tax experts): Starting at $85
- In office (includes help from tax experts): Starting at $85
- Drop off (includes help from tax experts): Starting at $85
TurboTax
Cost
Costs may vary depending on the plan selected - see breakdown by plan in the description below
Free version
For simple tax returns only. Not all taxpayers qualify. See if you qualify.
Mobile app
Yes
Live support
Yes, costs extra
Terms apply, see below for our methodology.
Pros
- Step-by-step guidance with a Q&A format that is easy to follow
- TurboTax Live provides on-demand advice and a final review from a tax expert
- Live Full Service has a tax expert prepare, sign, and file your return
- Accuracy and maximum refund guaranteed*
- Audit support, which provides free assistance if you get an IRS or other tax notice
Cons
- More costly than other software programs
- Live expert assistance plans have additional costs
Cost breakdown by plan:
- Free (For simple tax returns only. Not all taxpayers qualify. See if you qualify): $0 federal, $0 per state
- Deluxe (helps you maximize credits and deductions): $59* federal, $59* per state
- Premier (includes returns with investments and expenses): $89* federal, $59* per state
- Self-employed (for personal and business income and expenses): $119* federal, $59* per state
- Live Basic (includes help from tax experts): for a limited time, $0* federal, state included - simple tax returns only; must file by 3/31
- Live Deluxe (includes help from tax experts): $129* federal, $64* per state
- Live Premier (includes help from tax experts): $179* federal, $64* per state
- Live self-employed (includes help from tax experts): $209* federal, $64* per state
- Full Service Live Basic (includes help from tax experts; simple tax returns only): $209* federal, $54* state
- Full Service Live Deluxe (includes help from tax experts): $259* federal, $64* per state
- Full Service Live Premier (includes help from tax experts): $369* federal, $64* per state
- Full Service Live self-employed (includes help from tax experts): $399* federal, $64* per state
*Click here for TurboTax offer details and disclosures
**A simple tax return is Form 1040 only.
In the Build Back Better plan proposed by the Biden administration there are proposals to eliminate several retirement account strategies to avoid paying more taxes.
The plan wants to end the backdoor Roth IRA, which allows high-income individuals who don't qualify for a Roth IRA to put money into a traditional IRA first and then convert it into a Roth IRA. Currently, there is no limit on how much someone can rollover — avoiding taxation as long as you keep the funds in the Roth IRA until 59 and a half.
Additionally, the plan proposes to end 'mega backdoor Roths', which allows high-income earners to avoid taxes by converting a 401k into a Roth IRA with no taxation.
While the proposal is still on Capitol Hill, you may want to consider applying one of these strategies before they end. However, make sure to consult a tax professional first to see if this is best for you.
Bottom line
The IRS is anticipating more than 160 million individual tax returns this year, with a mass majority being filed online, so it's important to get yours in earlier rather than later. It's also recommended by the IRS to file electronically to avoid any delays. If you file electronically without any issues and opt for direct deposit, the IRS expects to issue refunds within 21 days of filing. And after you file, you can check your refund status here.
Additionally, if you have tax-related questions, Bronnenkant recommends reading up on the IRS website — as it's incredibly difficult to talk to an IRS agent on the phone.
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