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. It is marked by a specific deadline within which individuals and businesses gather all tax-related documents and file the return.

• Tax season is the period during which citizens who are required to submit income tax prepare and file tax return forms, as well as pay any taxes due.
• Individuals can avoid late filing or late payment penalties if they adhere to the filing period deadlines.
• The filing season may differ by country. Unless there is an unanticipated occurrence, such as the Covid 19 pandemic, countries adhere to their normal time period.
• Suggestions for a successful tax filing season include filing returns early and filing electronically.

Tax season raises awareness in people's minds to prepare for calculating income taxes, 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 or tax season refund 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 audit.

Let us look at some features of the time period:

• Deadlines – The season is marked by a particular tax season deadline within which the return is to be filed. However, it varies from country to country.
• Tax documents -There are various kind of documents needed for filing the tax returns. Various financial statements, income and investment records and other relevant documents are gathered for the purpose.
• Methods of filing – Taxpayers can file the returns either manually by using the physical forms or through online platforms.
• Tax payment- The taxes must be paid within tax season deadline which can be electronically, or through check or money order. If not paid on time, it may result in penalty.
• Refunds and adjustments – During the tax season, if the tax payers are  supposed to get any refund on their payment, This is issued either through check, direct deposit or adjusted with future tax liabilities.
• Financial planning – This is a time when the tax payers can assess their own assets and liabilities, lookout for various options to minimise tax, contribute to their retirement account, etc.

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, the IRS moved the due date of income 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 taxpayers liable to penalties. However, there is an option for filing an extension for a federal income tax 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 income tax season on February 24. There are certain exceptions, such as self-employed individuals and their spouses or common-law partners having a June 15 deadline for submitting tax forms. The early filing for business tax season will aid in the timely payment of tax bills, avoiding interest and penalties.

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

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.

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 packages, 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.

• Individuals can resort to tax preparers with professional credentials or tax software to get efficient services.
• Starting early and proper scheduling can stall the hazzle on the due date.
• Collect details of all income sources, spendings and analyze the applicable deductions as per law.
• Optimizing the disclosures of financial statements are essential to avoid confusion while filing tax returns.
• For obtaining the stimulus payment associated with lower income compared to previous years it is necessary to file the return even if not liable based on the income bracket.
• Prefer e-filing to ensure speedy process.
• Follow information on official websites for business tax season.

This has been a guide to what is Tax Season. We explain its features along with some examples, and tips for a successful season. You can learn more from the following articles –

• Luxury Tax
• Self-Employment Tax
• Futa Tax