Tax season ends in one week: What filers need to know

The 2022 tax season is quickly coming to an end, but millions of Americans still need to file their returns to the IRS.

As of April 1, the tax-collecting agency has processed more than 89 million returns and issued more than 63 million refunds worth a collective $204 billion. The average payment so far is worth $3,352 – much larger than last year's average of about $2,800 – though it may change by the April 18 deadline. 

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If you haven’t filed yet, here’s what you need to know:

Taxes are due on April 18 

The tax-filing season will end on April 18 this year for most individuals, rather than the usual deadline of April 15, because that's when Emancipation Day will be observed in Washington, D.C.

But taxpayers can request an extension until Oct. 15

If you’re an individual, you can request an extension online by filling out Form 4868 using the IRS’ "Free File" tool. You need to submit the form by April, or print the form and mail it to the IRS address for your state, making sure it's postmarked by April 18. Once you file the extension, you have until Oct. 17, 2022, to file your taxes.

However, there are pros and cons to requesting an extension.

It can give filers more time to thoroughly review their return and take advantage of all the tax benefits, like various deductions and credits, that are available to them to help them reduce their liability.

By pushing back the filing date, you can also avoid a failure-to-file penalty – an extra 5% per month on the unpaid amount, which can add up to 25% of the tax due. If you file for an extension, you have until Oct. 15 before the penalty starts accruing.

Experts caution that filing for an extension does not mean you can delay paying the government the taxes that are owed.

"Extension to file is not an extension to pay," Eric Bronnenkant, head of tax at online financial adviser Betterment, told FOX Business. "A common misconception is that you get more time to pay, and that’s not true."

You should file your taxes online if possible

Filing your taxes electronically is the fastest way to get a refund, according to the IRS, especially as the agency works its way through a backlog of paper returns that built up during its closure earlier this year in response to the pandemic.

The agency issues nine out of 10 refunds in less than 21 days. In the 2021 filing season, about 96% of taxpayers filed their returns online.

Your refund might be delayed 

There are a number of reasons that your refund could be delayed. Math errors or typos are a common culprit. 

If you filed a paper return, it could be stuck in a processing queue as the IRS works through a backlog of 7 million unprocessed individual returns. 

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"It’s taking us longer than normal to process mailed correspondence and more than 21 days to issue refunds for certain mailed and e-filed 2020 tax returns that require review," the IRS said recently.

The tax-collecting agency has also identified other frequent mistakes, such as: choosing the wrong filing status, not answering a question on trading virtual currency, forgetting to report all types of taxable income including unemployment benefits, making small typos in the name, birth date and Social Security entries, or mailing the return to the wrong address. 

There are additional challenges this year for filers that are related to the COVID-19 stimulus payments and the expanded child tax credit. Although filers do not owe money on the stimulus payments, they still need to correctly enter the amount they received on their returns – which needs to match IRS records.

There are "far more than 10 million" Americans who have failed to reconcile the two stimulus payments they were sent in 2020, IRS Commissioner Chuck Rettig said recently while testifying before the House Ways and Means Committee.

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The IRS has similar requirements for the child tax credit: Because at least half of the enhanced credit will be paid out as a lump sum when parents receive their 2021 tax return, recipients are required to accurately reconcile the credit they already received when filing their taxes this year. The information is pertinent to determining how much more money families receive from the credit when they fill out Schedule 8812 and Form 1040.

There’s still time to contribute to your IRA

The deadline for Americans to make contributions to their IRA for 2021 is April 18. The maximum annual contribution for traditional and Roth IRAs for most Americans is $6,000. If you're over the age of 50, you can add another $1,000.

Traditional IRA contributions may be tax-deductible – withdrawals are typically taxable – although there are several complicating factors, including income limits and whether you or your spouse are covered by a workplace retirement plan.