Tomorrow is Tax Day, or the tax filing and extension request deadline for most taxpayers.
Companies celebrate the end of tax filing season with gimmicks and freebies. Paying $10.40 for a chicken dinner or only the sales tax on Krispy Kreme doughnuts may be appetizing, but they won’t make it easier to swallow writing a check back to Uncle Sam.
There are many misperceptions about taxes and the tax code. There is also justified angst against the Internal Revenue Service (IRS), especially during this time of year.
Here are 9 things you should know this Tax Day:
- Tax Day is the 18th instead of the 15th. Usually, April 15th is Tax Day but the 15th landed on a Saturday this year. So the tax holiday would have been Monday, April 17th, but this is Emancipation Day in the U.S. Therefore, Tax Day was pushed to Tuesday, April 18th.
- Receiving a refund isn’t a good thing. A refund results from having too much income withheld from your earnings for taxes over the year. Uncle Sam has used your money interest-free and is now returning it.
- All of your income is not taxed at one tax rate. There are seven tax brackets in the U.S.: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Your tax bracket depends on your taxable income and filing status. However, chunks of your income fall into different tax brackets and are taxed at different rates.
- Inflation may have pushed you down from one tax bracket to another. The IRS adjusted income tax brackets and the standard deduction for 2023 to account for the impact of inflation. As a result, some people might be in a lower tax bracket than they were previously.
- The IRS still owes millions of people their tax refunds. No, really. According to an annual report to Congress from the U.S. Taxpayer Advocate, “the IRS failed to meet its responsibility to pay timely refunds to millions of taxpayers.”
- The IRS is slow, but you pay the price. During FY 2022, the IRS took an average of 193 days– about six months–to process taxpayer responses to proposed adjustments. That’s more than double the 89 days in FY 2019. Delays in processing correspondence typically lead to delayed refunds.
- The IRS likely won’t answer if you call. In 2022, the percentage of callers who reached a person by telephone was just over 12 percent. So, about seven out of every eight calls did not get through to a telephone assistor. This is better than the 11% of callers who were successful in reaching a person in 2021 but by no means a reason to celebrate.
- Red states have lower tax burdens than blue states. We all know this but WalletHub has ranked states and the redder the state, the lower the tax burden.
- Hidden taxes are everywhere. From dining out to buying pets, we pay “covertly hidden and masked as nebulously-titled “fees”” that add up to more than $650 billion in “hidden” taxes each year as Kristin Tate explained.
It’s said that the only certain things in life are death and taxes.
That may be true but it doesn’t mean we have to accept the latter. Reducing and eliminating taxes should be a priority for lawmakers, just like spending within their means.
Also, Congress should not strangle taxpayers with onerous tax reporting. Right now, millions of taxpayers are enjoying a yearlong reprieve from filing income from online sales and income on the form 1099-K.
However, if Congress does not change the threshold that triggers reporting from just $600 back to the original $20,000 threshold or something higher, next Tax Day will be painful for many more Americans.