The Internal Revenue Service (IRS) has begun accepting and processing tax returns for the 2024 tax-filing season on Monday, with the agency expecting over 146 million individual returns to be filed this season.
Who Is Required to File
Only individuals making $11,000 or more in a year and married couples earning $22,000 or more will have to file taxes in the 2024 season. This is up from $10,275 and $20,550, respectively, from the previous season. Be sure to check which income bracket you belong to as the revised limits could mean you are bumped to a lower tax rate this year.How to File
There are three ways you can file taxes: 1) fill in IRS Form 1040 by hand and mail it; 2) use an online tax software to file returns; or 3) hire a tax preparation expert to do the job.“Due to staffing issues, processing paper tax returns could take several weeks longer. Taxpayers and tax professionals are encouraged to file electronically,” the IRS said.
If you choose the online option, IRS offers its Free File option using which you can file taxes without any cost. However, the service is only available to individuals with an adjusted gross income of $79,000 or less for the year.
The tool will only be available in 12 states—Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. Moreover, only a few forms and deductions will be accepted by the tool in its initial phase. As such, Direct File may not be suitable for everyone.
Documentation
Prepare all necessary documentation to streamline tax preparation and avoid unnecessary hiccups and confusion during the filing preparation. Taxpayers should keep the following documents ready:- Personal information: This includes social security numbers, tax ID, IP PIN, and bank account numbers. You can also keep last year’s tax returns in case you need to refer them for some reason.
- Income: Employees should have their W-2 forms ready. Individuals who receive other additional income should have 1099 forms with them. Those who do contract work have to submit form 1099-NEC. If you made money via rentals, royalties, or game show winnings, these must be reported through 1099-MISC.
- Investment income: Interest income is to be reported via 1099-INT and dividend income through 1099-DIV. Broker-handled transactions must be shown in 1099-B.
- Credits: This includes documents related to child tax credits, retirement savings contributions credits, and American opportunity and lifetime learning credits.
- Deductions: Prepare documents on retirement account contributions, medical expenses, state and local taxes, charitable donations, educational expenses, classroom expenses, property taxes, and mortgage interest.
- Estimated tax payments: Individuals who have made estimated tax payments during the 2023 tax year must keep their payment documents ready.
Withholdings and Credits
Employed taxpayers who have had taxes withheld from their payments may be able to get all or a part of those taxes as refunds. As such, make sure all information in the employer-provided W2 forms is entered when submitting returns.Similarly, taxpayers may also get credits in case they have children.The Earned Income Tax Credit (EITC) is a refundable tax credit for low and moderate-income taxpayers. For the 2023 tax year, they can claim $7,430 in EITC if they have at least three qualifying children.
Tax Refunds
If you qualify for a refund and want to receive it as quickly as possible, remember to file electronically and add your bank account number during the filing process. This will ensure that the refunds are made via direct deposit.When to File
Taxpayers have time until April 15 to file their taxes. However, those who live in Maine or Massachusetts have time until April 17 to file taxes due to Patriot’s Day and Emancipation Day holidays.Those who request an extension and get approved will have to file by Oct. 15. Taxpayers residing in a federally declared disaster area may have additional time to file.
The IRS has announced that it will be “extending hours of service in nearly 250 Taxpayer Assistance Centers (TACs) across the country, providing additional help to people.” In addition, “the IRS will again offer special Saturday hours at many TACs across the country February through May.”
Changes in 2024
These are some of the other changes made by the agency set to take effect in 2024 tax year: increased standard deductions, higher health flexible spending arrangement (FSA) contribution limits, and increased 401(k) and IRA contribution limits.For instance, contribution limits for plans like 401(k) and individual retirement accounts (IRA) were raised by $500 for the 2024 tax year.
The IRS also raised phase-out ranges that are used by the agency to manage how much an individual can gain in terms of tax benefits like deductions, credits, and exemptions.
Americans who earn money in another country use the foreign earned income exclusion provision to prevent double taxation. For the 2024 tax year, the exclusion has been raised to $126,500, up from $120,000 in 2023.
The IRS raised the contribution limit for flexible spending arrangements (FSA) by $150. FSAs are a type of savings account that employees use to pay for medical expenses. Contributions from the account are deducted from the taxpayer’s wages.
An employee who chooses to participate in an FSA can contribute up to $3,200 through payroll deductions during the 2024 plan year, up from $3,050 in 2023.
