Helpful Tax Info

January 29, 2024, marks the official start of tax season. As of that date, the IRS began accepting tax returns for the year 2023. Per the official website of the IRS, the revenue service for the United States federal government, more than 128.7 million individual tax returns are expected to be filed by the tax deadline. Taxpayers should expect to see helpful tax changes and improvements to services. Whether you file your own or have a professional prepare your taxes, there are a few important things to consider. Here is some helpful tax info:

• Individual income tax returns are typically due on April 15^th for calendar year filers.
• Regardless of what you owe, it is beneficial to file and pay taxes owed by the due date to avoid penalties and interest.
• Tax returns can be filed electronically, and one may opt for direct deposit.
• The IRS has rolled out a new Direct File pilot program. This allows eligible taxpayers to file their taxes online, free, and directly with the IRS. For more information on this program, visit https://www.irs.gov/about-irs/a-closer-look-at-the-irs-direct-file-pilot
• If you do not owe taxes, or if you are due a refund, penalties and interest do not apply.
• In some cases, individuals may file a tax extension. This generally occurs if more time is required to complete one’s taxes. Note that some states require a separate extension form.
• Individuals filing for a tax extension must do so by April 15, 2024. This extension gives people until October 15, 2024, to submit their 2023 return. Very important: An extension to file taxes is not an extension to pay taxes.
• If you cannot pay your taxes, the IRS says do not panic. You may qualify for an online payment plan to include an installment agreement. This includes short and long-term payment plans.
• The IRS offers free filing for taxpayers with AGIs of $79,000 or less. Additionally, the IRS offers free electronic filing offerings for those serving in the U.S. military.
• If you intend to file your tax return yourself but run into trouble, do seek the advice of a professional tax preparer to ensure that your return is filed accurately and on time.
• Note that January 31 is the deadline for employers to send out your W-2 form.
• This year there are proposed changes to the child tax credit. If legislation is enacted, eligible families can see an average tax cut of $680 for 2023 taxes. This can affect millions of families filing 2023 taxes.
• Note that there is an increase in standard deductions. Currently, standard tax deductions for married couples filing jointly is up $1,800. For single individuals or those married filing separately, the standard deduction is up $900.
• People who are 65 and older and those who are blind are eligible for an additional standard deduction.
• Taxable income from selling items online must be reported to the IRS via 1099-K forms.
• Some workers such as independent contractors and the self-employed may make quarterly estimated tax payments on set dates throughout the year. Partnerships and S-Corporations may also have different filing deadlines than individual taxpayers.
• Tax refunds can be tracked at https://www.irs.gov/wheres-my-refund
• Be aware of tax scams. The IRS conducts most of its official business by mail. They do NOT make arbitrary phone calls, NOR do they send out random emails requesting payment or asking for personal information. Additionally, they NEVER request payment in gift cards. Those are red flags of a scam. To be safe, do not engage with scammers.

A necessary “evil”

Taxes, required by law, provide crucial revenue for the government. Though taxes work to fund essential services, citizens often dislike having to pay them. Mark Twain once jested, “What is the difference between a taxidermist and a tax collector?” The answer, “The taxidermist takes only your skin.”

This article is for broad informational purposes only and is not intended as a substitute for professional tax advice.