Different Deadlines
April 15 is the deadline to file taxes for all states, except Maine and Massachusetts. Due to Patriot’s Day and Emancipation Day holidays, the deadline for filing taxes in these states is extended for two more days. In addition, taxpayers from states impacted by disaster situations have different tax deadlines as well.Extending Deadlines
Taxpayers who cannot file their taxes by April 15 can request an extension. The request must be made prior to the deadline. If the IRS grants the request, the deadline to file returns will be extended six months, to Oct. 15.However, “an extension to file is not an extension to pay taxes. If they owe taxes, they should pay them before the due date to avoid potential penalties and interest on the amount owed,” the IRS states.
Taxpayers whose main place of business is outside the United States and Puerto Rico are allowed an automatic two-month extension to file their returns. To avail this benefit, the taxpayer must not be residing in the United States or Puerto Rico at the time of their regular tax return due date.
Military and U.S. Navy members who are on duty outside of the United States and Puerto Rico can avail such extensions as well.
Direct File
Last month, the IRS made the full-scale launch of its Direct File service allowing certain eligible taxpayers to file taxes online for free.
For taxpayers from Arizona, California, Florida, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming, the service is available until April 15. Taxpayers from Massachusetts have access to Direct File until April 17.
Better Phone Response
The IRS’s poor customer-care service via phone has been a point of criticism. A letter by 13 Republican attorneys general earlier this year pointed out that the IRS “only answered 2 percent of the calls received to its official helpline” in 2021.A Feb. 20 report by the U.S. Government Accountability Office (GAO) suggests that things are changing. “In recent years, customer service has been an issue for the IRS. Taxpayers have faced long phone wait times, unanswered calls, and delays in the processing of their tax returns. But as our new 2023 filing season report shows, IRS’s service is improving,” the report states.
“The average time to answer a call shortened from 28 to 3 minutes” in filing season 2023. The “IRS is doing a better job answering taxpayer phone calls. During the 2023 filing season, it answered 7.7 million calls—a 65 percent increase compared to 2022.”
Higher Refunds
The IRS received 54 million tax returns as of March 1, 2024, and sent out more than 36 million refunds. The average refund amount so far is $3,182, which is 5.1 percent higher than the refund amount in the same period last year.For instance, the standard deduction for married couples filing jointly jumped by $1,800 or 7 percent in tax year 2023. In addition, federal tax brackets also got higher.
Crypto Transactions
All taxpayers are required to report any sale proceeds and gains or losses from the sale of cryptocurrencies on their returns.On tax forms, citizens are asked the following question: “At any time during 2023, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”
New Client and ‘Ghost Preparer’ Scams
The IRS has issued recent warnings to tax professionals and businesses to watch out for specific types of hacking methods—”new client” spearfishing and “ghost preparers”—because of the increasing number of incidents.“Phishing refers to emails or text messages designed to steal personal information directly, or by clicking on an embedded link or attachment; spearfishing is more targeted. Spearphishing is a type of phishing that targets specific individuals, organizations, or businesses, typically using malicious emails,” the IRS explained.
In the “new client” scam, cybercriminals impersonate real taxpayers and approach tax professionals, seeking help with their returns. The criminals then send phishing emails to get sensitive data or gain access to the tax preparer’s client information from their computer networks.
Individuals who use tax-preparation services should ensure that the highest security standards are maintained in the business for protecting critical data.
“It’s crucial for tax professionals and businesses to be wary of creative and evolving cyberattacks designed to access sensitive systems,” said IRS Commissioner Danny Werfel.
“Cyberattacks pose a threat to not just the livelihood of the businesses but the sensitive tax and personnel information that identity thieves can use to try filing fake tax returns.”
Earlier this month, the IRS alerted taxpayers to look out for “ghost preparers”—tax preparers who entice vulnerable people to take advantage of tax credits for which they do not qualify.
“These preparers can charge a large percentage fee of the refund or even steal the entire tax refund. After the tax return is prepared, these ‘ghost preparers’ can simply disappear, leaving well-meaning taxpayers to deal with the consequences,”the IRS said.
The agency listed out some of the warning signs of ghost preparers like asking for cash payments, often without a receipt, and with fee amounts typically calculated as a percentage of the refund amount.
They invent false income for the client so that the taxpayer can apparently claim deductions and get higher refunds. Some of them may try to convince taxpayers to deposit refunds in other bank accounts.
“Ghost preparers and other shady return preparers form a real threat every tax season to well-meaning taxpayers,” Mr. Werfel said. “We urge people to choose a trusted tax professional that will be around if questions arise later.”
