When Does the Tax Year End? A Guide to Understanding Tax Years and Deadlines

The end of the tax year is an important date for individuals and businesses when filing taxes. Knowing when the tax year ends and key deadlines can help you avoid penalties and make tax time less stressful. In this comprehensive guide we’ll explain what a tax year is when it ends for different types of taxpayers, estimated tax deadlines, and tips for staying organized.

What is a Tax Year?

A tax year is an annual accounting period for tracking income and expenses for tax purposes, There are two main types of tax years

• Calendar tax year – This runs from January 1 to December 31, It is the most common tax year used,

• Fiscal tax year – This is any 12-month period that ends on the last day of any month except December. For example, a fiscal tax year could run from July 1, 2022 to June 30, 2023.

Unless you have a required fiscal tax year, you establish your tax year by filing your first tax return using that year. Once established, you generally need IRS approval to change tax years.

When Does the Tax Year End for Individuals?

For individual taxpayers, the tax year typically ends on December 31. This means the 2022 tax year covers January 1, 2022 to December 31, 2022.

If you use a calendar tax year, your tax return, payments, and other deadlines fall on the same date each year:

• April 15 – Tax return filing and payment deadline for most individuals.

• April 15 – First quarter estimated tax payment due.

• June 15 – Second quarter estimated tax payment due.

• September 15 – Third quarter estimated tax payment due.

• January 15 – Fourth quarter estimated tax payment due. This is also the deadline for making IRA contributions that count for the previous tax year.

Note: Deadline dates may be extended if they fall on a weekend or holiday.

When Does the Tax Year End for Businesses?

Businesses can choose to use a calendar tax year or fiscal tax year when they first file taxes. Common fiscal tax years adopted by businesses include:

• Reporting period that aligns with the natural business cycle (e.g. retail business using year that ends January 31)

• Year that ends on the last day of any month

C corporations generally must adhere to the tax year chosen when filing their first business tax return. S corporations, partnerships, and sole proprietors have more flexibility to change tax years if needed.

Estimated Tax Deadlines for Businesses and Self-Employed

Taxpayers who are self-employed or operate a business typically have to make quarterly estimated tax payments to stay current on their tax obligations. Estimated taxes are paid as income is earned throughout the year.

The IRS requires estimated payments if you expect to owe $1,000 or more when you file your tax return. Due dates are:

• April 15 – First quarter installment payment due

• June 15 – Second quarter installment payment due

• September 15 – Third quarter installment payment due

• January 15 – Fourth quarter installment payment due

Corporations may have different estimated tax requirements and deadlines

Paying enough estimated taxes helps avoid penalties for underpayment when you file your tax return after the year ends.

Why the Tax Year End Date Matters

Knowing when the tax year ends is crucial for:

• Accurately reporting income and deductions – You must report income and expenses in the correct tax year.

• Avoiding penalties for filing/paying late – Pay attention to tax deadlines to avoid failure-to-file, failure-to-pay, and underpayment penalties.

• Tax planning moves – Tax year end is the deadline for actions like income deferral, retirement plan contributions, harvesting investment losses, etc.

• Claiming tax deductions – Expenses must be paid by the tax year end to deduct in that year.

• Receiving tax documents – Forms like W-2s and 1099s are based on the annual tax year period.

• Tax benefits eligibility – Thresholds for deductions, credits, income phaseouts, etc are based on annual income reports.

Tips for Organizing Year End Tax Information

Follow these tips for keeping track of everything you need for tax time:

• Mark your calendar – Record important deadlines like estimated payments, W-2 and 1099 due dates, tax return filing date, etc.

• Keep income documents – Store paystubs, 1099s, and records of any other income received.

• Track deductible expenses – Maintain receipts and mileage logs for potential medical, charitable, business, and other deductions.

• Review prior year returns – Look at previous tax returns to identify any items needing follow-up and detect patterns or changes in income/deductions.

• Manage digital records – Scan paper documents to create digital copies for easy access. Backup files.

• Consult a tax pro – Get advice from a tax professional early on to identify anything that needs special attention before year end.

The Bottom Line

Knowing when the applicable tax year ends helps individuals and businesses meet important deadlines, correctly report income and claim deductions, maximize tax savings from planning tactics, avoid penalties, and get organized for a smoother tax filing process.

Mark your calendar with key deadlines and follow sound recordkeeping practices throughout the year. Pay attention to any notices or tax documents indicating changes. Consult a trusted tax advisor with any questions. With this proactive approach, you can stay on top of your tax situation and feel more confident when the tax year comes to an end.