We're a little more than halfway through the tax season, and it's been a busy one for local tax preparers.
"We've been very busy," said Bruce MacKinnon with Jackson Hewitt Tax Service. "And that means that people are following the first rule of taxes, which is file early."
New tax laws have expanded tax credits for families.
"There were significant changes to what is called the child tax credit," MacKinnon said. "The amount of the credit went up, they prepaid in the form of monthly payments between July and December, half of the credit, and they expanded the age eligibility slightly."
The deadline for filing - or filing an extension - is April 18 this year. But those extensions are for the time to file, not the time to pay.
"You are expected, if you have an idea of what you're going to owe ultimately when the return is filed, you are expected to make that payment when you file the extension," MacKinnon said. "But it does give you a six-month window to get your paperwork together and get the return filed."
If you've picked up any gig or freelance work during the pandemic, beware - that's been causing issues for people who aren't aware of all the taxes associated with those jobs.
"Because they're basically self-employed, they don't normally have any taxes taken out through withholding," MacKinnon said. "And there's an additional tax, if you're self-employed, called self-employment tax, which a lot of people are not aware of and can be a surprise at the end."
If you're looking to reduce your taxable income, there's still time to do that for the 2021 tax year.
"Your contributions to a 401k plan or to an IRA reduce your taxable income, and thus lower your tax bill, so it's a pretty positive thing," MacKinnon said. "People should know if they contribute to an IRA any time up to the filing date, April 18, they can still reflect that benefit on their 2021 tax return."
