Tax season is here and the countdown is on for the quarter of Americans who are waiting until the last two weeks to wrap things up. But with a little preparation and lots of deep breaths, you can get ahead of the curve.
The Internal Revenue Service began accepting and processing 2022 tax returns last week. The agency expects more than 168 million returns – so it’s important to brush up on the key facts before making an application.
Some good news: Taxpayers have three extra days (until April 18) to file this year, since the typical April 15 deadline falls on a weekend, closely followed by Washington DC’s Emancipation Day.
In recent years, tax season has been confusing as federal, state, and local governments gave different tax refunds and rebates — like stimulus checks and increased child tax credits — due to the impact of COVID-19. Now, nearly three years into the pandemic, the tax regime is returning to pre-pandemic normalcy, with some added benefits for green energy and vehicles.
Here’s what to expect for the 2023 tax season in Philadelphia.
Deadlines for the 2023 tax season
The deadline for submitting the 2022 tax return is April 18. If you are unable to file by then, be sure to apply for an extension and pay any taxes owed by the April due date.
Those applying for an extension of their 2022 tax returns have until October 16 to file them.
What taxes do Philadelphians need to file?
Everyone will have different taxes depending on how they make money and what assets they own. However, there are some that everyone must contend with.
You need to know how much you have earned this year as an individual or as a business. If you are an employee or an independent contractor, your employer should provide you with the income tax records you need.
General taxes that Philadelphia residents must pay:
Changes to the Tax Code in 2023
Pandemic-related tax breaks have ended. There are no stimulus checks or increased payouts for tax credits like Earned Income Tax Credit, Child Tax Credit, and Child/Dependent Care Tax Credit — which return to their 2019 payout amounts.
However, this year is the Inflation Reduction Act 2022 Tax breaks for green taxpayers. For solar energy products such as solar panels on your home, you can deduct 30% of the cost of installation from your taxes. People who bought a new electric vehicle are eligible for tax credits of up to $7,500 (although final assembly of the vehicle had to be done in the US).
» READ MORE: 4 Incentives for Homeowners to Have Solar Panels in Philadelphia
Some final housekeeping: Deductions for charitable causes such as donations must be itemized and submitted using an additional form — Appendix A (Form 1040). Also, a new PayPal and Venmo tax rule on the need to pay taxes on transactions of $600 or more will be suspended until 2024 because taxpayers are unwilling to do so.
What are the fees and penalties for late tax filing?
After April 18, 2023 Deadline, your taxes are late and subject to interest and penalties. If you fail to submit on time, the following can be expected:
Federation: 0.5% interest per month on unpaid taxes, plus 5% penalty per month on unpaid taxes owed.
Pennsylvania: 0.000192% interest per day on unpaid taxes, plus 5% penalty per year on unpaid taxes owed.
Philadelphia: 0.75% interest per month on unpaid taxes, plus 1.25% penalty per month on unpaid taxes owed.
If you know you won’t make the deadline, you can apply to the IRS for a deadline extension. If you are granted an extension, you have six additional months to file the tax return and the tax return is due in October. Notice: Even if you are granted an extension of filing, you must submit the estimated amount of tax you owe before the April deadline to avoid penalties.
When the IRS grants you an extension, the Pennsylvania and Philadelphia Treasury Departments automatically grant you an extension for their taxes as well. In New Jersey, all you need to do is include a copy of your federal application for extension or a confirmation number from the IRS with your state tax return.
When will I receive my tax refund?
According to the Internal Revenue Service website, you can get your tax refund within 21 days if you do the following:
Submit your 2022 tax return electronically.
Request to receive your refund in the form of a direct deposit.
File your 2022 tax return without errors or hassles.
Remember: The IRS cannot issue a refund that includes an earned income tax credit or an additional child tax credit until mid-February.
Check the status of your refund 24 hours after electronic filing using your social security number, filing status, and refund amount on your 2022 tax return. Taxpayers filing a paper return should wait at least six months before checking their refund status.