Tax Season

What is Tax Season?

The term tax season refers to a short period in a tax year during which the individuals prepare and file tax returns of the previous tax year. During the filing period, the tax authority will begin accepting and processing the tax returns received.

Generally, the filing season differs from country to country. For example, in the United States, it spans from January 1 to April 15, while in Australia, it spreads across July 1 to October 31.

Key Takeaways

Explanation

Tax season raises awareness in people’s minds to prepare for calculating income taxesIncome TaxesIncome tax is levied on the income earned by an entity in a financial year as per the norms prescribed in the income tax laws. It results in the outflow of cash as the liability of income tax is paid out through bank transfers to the income tax department.read more, related documents, and tax filing forms. The filing period provides an appropriate time for data collection, return filing and tax payment. Individuals might meet with their tax preparers during the filing season, document all relevant reports, and prepare tax forms. All these processes must be performed within the season to avoid fines and get tax credits on time.

Tracking income and spendings has become considerably more manageable thanks to advances in technology and software. Also, to speed up filing operations and minimize associated traffic, tax authorities urge online filing. They also advocate the use of official websites for obtaining guidance in order to avoid mistakes. Finally, citizens should retain their tax records for three years after the season has concluded if the IRS conducts an external auditExternal AuditExternal Audit is defined as the audit of the financial records of the company in which independent auditors perform the task of examining validity of financial records of the company carefully in order to find out if there is any misstatement in the records due to fraud, error or embezzlement and then reporting the same to the stakeholders of the company.read more.

Examples

Different nations usually have their tax filing periods, giving people time to organize and submit the necessary documents for processing. Here are a few examples to help grasp the concept.

#1 – Tax Season in the United States

The tax filing period in the United States runs from January 1 to April 15. The Internal Revenue Service (IRS) can determine the changes in the tax filing period. For example, due to Covid 19 outbreak, IRS moved the due date of tax season 2020 from April 15 to July 15, 2020. Also, in 2021, the IRS forced the season start date to February 12 in order to allow time for programming and testing of the IRS system to guarantee seamless operation following the December 27 tax law revisions. As a result, the 2021 tax filing period ended on May 17, 2021. October 15 is the due date for those who have an extension on filing the 2020 tax returns.

Missing the deadline makes the taxpayersTaxpayersA taxpayer is a person or a corporation who has to pay tax to the government based on their income, and in the technical sense, they are liable for, or subject to or obligated to pay tax to the government based on the country’s tax laws.read more liable to penalties. However, there is an option for filing an extension for a federal income taxFederal Income TaxFederal income tax is the tax system in the United States and is levied and governed by Internal Revenue Services (IRS). It helps determine the tax charged on the income earned by individuals, corporations, and various other legal entities.read more return. Taxpayers can use Form 4686 to avail of extensions beyond the due date. If the taxpayer can prove reasonable cause for not filing or paying on time, the taxpayer won’t have to incur a late-filing or late-payment penalty.

#2 – Tax Season in Canada

The tax filing period in Canada generally runs from January 1 to April 30. If April 30 falls on a weekend or holiday, the deadline will be the next business day. The CRA will begin collecting tax returns on February 24. There are certain exceptions, such as self-employed individuals and their spouses or common-law partners have a June 15 deadline for submitting tax forms. The early filing of tax returns will aid in the timely payment of tax bills, avoiding interest and penalties.

Tax Season

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Tax filing period in Canada: 2021

  • January 1, 2021: Start of the new tax year
  • February 24, 2021: E-filing begins
  • April 30, 2021: Deadline to file taxes (Self-employed individuals and their spouses or common-law partners are excluded)
  • April 30, 2021: Deadline to pay taxes
  • June 15, 2021: The due date to file your taxes if you, your spouse, or your common-law partner are self-employed.

#3 – Tax Season in Australia

Tax Season in Australia

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In Australia, the tax filing period is different from those in the United States and Canada. The Australian financial year starts from July 1 and ends on June 30. The tax filing period spans from July 1 to October 31. Following the tax dates will ensure a stress-free tax filing process without the need for an extension or penalties.

Tips for a Successful Tax Season

The tax filing period is a stressful time, specifically for the tax preparers. Moreover, the tax filing period amid the Covid 19 pandemic is perceived as complicated due to the inclusion of economic stimulus packagesEconomic Stimulus PackagesAn economic stimulus package is an attempt by any nation to stabilize the economy through monetary and fiscal policy expansion. It attempts to avert the economic slowdown, and getting out of recession by helping the private sector to recover and flourish, resulting in economic growth.read more, unemployment insurances, and work from home scenarios. Therefore, accurate calculations and strict adherence to tax legislation are mandatory. However, following some basic procedures can reduce the stressful atmosphere and result in a productive season.

Frequently Asked Questions (FAQs)

When can I file my taxes 2021?

Tax season 2021 start date was February 12, 2021, and tax season 2021 end date was May 17, 2021. Due to changes in tax laws and the Covid 19 outbreak, the tax filing season in 2021 differed from the regular tax reporting period in the United States.

How do I prepare my taxes for 2021?

The tax filing process requires extreme caution. Any ignorance or misrepresentation of data invites penalties. Various activities occur in association with the return filing. It includes finalizing the financial documents, calculating taxes, filing the return with the tax authority, paying taxes and receiving credits.

What is the tax period for 2022?

In the United States tax year is from January 1 to December 31. Generally, the tax filing period starts from is January 1 and ends on April 15. However, in the absence of unanticipated events, we may presume that the tax filing period for 2022 will be from January 1, 2022, to April 15, 2022.

This has been a guide to Tax Season and its meaning. Here we discuss tips for a successful tax season and its examples in the United States, Canada and Australia. You can learn more from the following articles –