Transcript for Money Monday: What to know before filing your tax return
- It's time for Money Monday, and today we are focusing on those looming tax returns. With the April 18 deadline quickly approaching, we are bringing you up to speed on what you need to know about filing that 2022 return.
- OK, so here to help us out is the personal finance columnist for The Washington Post, Michelle Singletary. Thank you so much for being here with us today.
- Oh, my pleasure.
- So we're less than a month away. Gio's here to make everyone procrastinating feel bad about themselves.
- Because I already did it. I'm just--
- He's already filed.
So if you're more like me and you haven't yet, what is some advice you have for some folks that still need to do it?
- So the number one thing is to file on time, particularly if you owe money. Lots of people think if they file an extension, it's an extension to pay, but it's not. The IRS wants their money on the 18th.
You know, give me my money.
- Yeah, don't wait.
- Don't wait.
- Don't wait. Especially because we were talking about this, and this is why I try to do it so early is because sometimes you have scammers, and try to get in and take your return.
- That's right.
- So they get in, and they file it, but if you get there first, they don't have a chance.
- You get there first. Right, you file it, and you get it in, and if you can file electronically. If you do need time to pay, contact the IRS. Don't listen to those ads and say, oh, you know, I'm going to get you pennies on the dollar. They are going to-- most of them are going to scam you. So just call the IRS, and I know it's very scary because IRS has a reputation.
- And easy and quick.
- It is very easy.
- Michelle, what are some of the changes we're seeing this year?
- So I think the first thing is the child tax credit. In 2021, because we were in the middle of the pandemic, they increased that credit. Well, it's no more. So as of 2022, you don't get that. So it goes back to pre-COVID limit, which is up to $2,000 per child under 17.
- So in general, some people might be seeing less money in their returns?
- That's right. IRS returns are down about 11% this year, which, actually, I think is a good thing because lots of people file for their taxes regularly to get a refund. And that's like having the IRS hold your money for a year, and now that there's lots of-- you can get 3% to 4% on your bank account. You want to get that money. If you've got credit card debt, you want to get that money so that you can pay it during the year.
- You know, I have a question. When you're, for example, at your job and you're filling out the forms, how do you know how much to contribute in taxes so that you don't owe anything at the end?
- Yeah, you talk to a tax pro, or the IRS has a withholding calculator that you go in, you put in your information, and it will tell you how much roughly that you want to withhold. The idea is you pay a little or get a little bit back, but these huge checks don't do that. And if you are going to do it, just send it to me.
I'll handle it for you very well and give you back a little bit of money of interest. And I think the other thing is that now lots of people were worried about that $600 limit on the payment apps like you go to dinner and you split a tab.
- And they were worried that IRS was going to come after them. No, it was never that case. It was only for people making money off of these payment apps. But they delayed that for a year, so you don't have to do that this year.
- And so that's what you talked about with all these payment apps. What about like the Venmo payments, things like that?
- That's exactly right. So it's delayed for a year, but that doesn't mean that if you made money, you shouldn't pay the IRS. It just means that you have to hit a certain level, you know, and I know people like they don't need my money. But here's the thing. There is a benefit for filing if you're a small business owner. For example, you get Social Security. It depends on how much you're in, and if you want to get a house, they want to see your tax returns.
- Your honest tax returns.
- Oh, the honest ones.
- She's keeping it real always.
- Not that double one. You know, two books, you know. You don't want to do that.
- A lot of people they sell their stuff on like Facebook Marketplace, right?
- And so that's what you're talking about?
- Well, if you make a profit. So you've got a couch, and you sold it. You bought it for $800. You sold it for $400. That's not it. But if you're selling things and making a profit--
- Ooh. Oh, OK.
- --then you get this 1099.
- See, I'm asking because I just moved and did just that.
- I did too.
- No profit. No profits.
- No profits on anything.
- That's right. That's right.
- Any words of caution?
- So I think you'd be very careful about the tax professionals that you hire. If they say I can guarantee you a $3,000 refund, I can guarantee you they are a fraud.
- So be very careful because everything you put on that tax return, you are responsible for. You can't say, well, my aunt Becky filled out my tax return. You know, go for her. You know, no, you are responsible. So just be very honest when you file your taxes.
- Don't throw aunt Becky under the bus like that, Michelle.
- No, a little personal responsibility.
- OK, uncle Roscoe, how about that?
- Michelle, thank you so much.
- You're so welcome.
- I appreciate you always keeping it real. And for more of Michelle's financial advice, you can always check out her latest project, Money Milestones, in The Washington Post.
This transcript has been automatically generated and may not be 100% accurate.