Smart Planning for Tax Season 2024

The start of the new year brings with it the anticipation of tax season 2024. The best strategy for the tax filing process is to prepare in advance – don’t wait for the last minute. Rushing through your tax preparation can lead to expensive tax return mistakes. 

More than 134 million households, or 95% of tax filers in the United States, e-filed their tax returns last year. Whether you’re working with a tax professional or planning to use tax software to help you pay taxes this year, you’ll want to be sure your option is reliable and safe. 

Key Insights:

• Monday, April 15, 2024, is the filing deadline for tax return dates. Standard deductions for tax returns will increase by about $1800.
• Limits on deductible IRA contributions have remained the same, while 2024 tax brackets will shift about 7% in response to inflation in 2023.
• To be prepared for tax season 2024, ensure you complete your paperwork accurately with expert assistance or software and keep track of the correct tax return deadlines to file on time. 

Ready or not, tax season 2024 is upon us, so it’s time to prepare. We’ve collected feedback from online reviews to help you identify what you need to know. 

• What is the tax deadline 2024
• How to prepare for tax season 
• How to choose online tax software
• Recent tax law changes
• Plan ahead to file taxes

What Is the Tax Deadline 2024?

If you want to file your income taxes on time, you’ll need to file by the tax deadline, Monday, April 15, 2024. Tax filing season 2024 is underway, and the IRS is accepting IRS form 1040 in mid to late January. As tax season kicks off, remember that you can file your taxes or you can file an extension if you need more time. If you file an extension by April 15, 2024, your tax return won’t be due until October 15, 2024.

Other entities have different tax filing deadlines.

• The deadline to file partnership taxes (Form 1065) is March 15, 2024. The extended partnership deadline is September 16, 2024.
• C corporations must file taxes (Form 1120) by April 15, 2024. The extended deadline for C Corporations (Form 7004) is October 15, 2024.
• S corporations must file taxes (Form 1120S) by March 15, 2024. The extended deadline for S corporations (Form 7004) is September 16, 2024.

The abovementioned tax forms are available here.

How to Prepare for Tax Season 2024

Wondering how to prepare for tax season? Your first steps are to be sure you understand the process. Here are the basic steps to help you prepare for the coming tax season. 

1. Gathering tax documents

The forms to complete can be mailed out. They can also be available electronically. Many online tax preparation services have forms available near the start of January. Documents to have on hand include:

• W-2 forms sent from employers.
• 1099-MISC forms for miscellaneous income.
• 1099-INT forms for interest income.
• 1099-G forms for government payments including unemployment.
• Form 1095-A for health insurance documentation.
• Evidence of IRA contributions.
• Evidence of charitable donations.
• Receipts of large purchases, mortgage interest payments, and other tax deductible items. 

2. Estimation and paying tax owed

Look through your tax forms from the previous year to check whether it is likely that you owe any tax. If you fail to pay the tax you owe, you risk interest and penalties. April 15th is the date when penalties start accruing. The IRS will charge interest on late or unpaid taxes, regardless of cause. Remember, as you earn more money your tax brackets will shift and you’ll owe more taxes. The 2024 tax brackets range from 10% to 37%.

The tax return dates in 2024 are the same regardless of whether you owe taxes or if the IRS owes you a tax refund. But there is greater urgency if you owe the government tax funds. The government will not charge fees if you fail to claim what they owe you. They will certainly charge penalties and interest if you fail to send what you owe them. A 2024 tax refund estimator can help determine if you are likely to owe money so you can plan accordingly.

3. IRA (individual retirement account) contributions information

Form 5498: IRA Contributions Information reports your IRA contributions to The Internal Revenue Service (IRS). Deductible IRA contributions are limited to $7,000 in 2024 or $8,000 if you are age 50 or older, for both traditional and Roth IRAs (a type of IRA that lets an investor save up to a certain amount of after-tax dollars each year. The earnings in the account grow tax-free, and distributions taken after age 59½ (if the account has been open for at least 5 years) are exempt from taxes.

You will get a tax break for contributing to certain types of IRAs, and you can make contributions to your IRA after the end of the calendar year. For example, you can contribute to your IRA in March of 2024 and apply the tax savings on your 2023 tax form. 

4. Filing for an extension

 If there is a situation when you may miss a deadline for filing taxes or make mistakes because you're in a rush, you should request an extension. In order to get a 6-month extension, there are different forms:

• Partnerships, S Corporations, and C Corporations use Form 7004.
• Individuals use Form 4868.
• Nonprofit and charity organizations use Form 8868 to request a 3-month extension.

While filing tax returns and gathering the necessary documentation, you should also consider the following:

• Are you using the itemized deduction or a standard deduction? Itemized deductions are claimed on Schedule A of Form 1040, which must be attached to your annual tax return. It is usually claimed in case of state and local taxes, gifts to charity, home loan interest, tax preparation fees, medical and dental expenses. A standard deduction is a fixed dollar amount, based on your filing status and age, that the IRS lets you take off (deduct) from your taxable income. 
• Business expenses. You can claim certain items as business expenses during the year and justify them to the IRS.
• Donations and dues may be considered and claimed as a tax deduction. Add receipts to your documentation and provide information on how much you have donated.
• Finance documents. Bank e-statements, credit card e-statements, retirement account information put in a tax folder. You will need information and data to support the numbers used for your taxes.

5. Optimizing tax efficiency by accounting for life changes

Taxes are not static. Changes in your family or income situation impact your tax situation. When filing taxes, you should be prepared to document and provide information about the following:

• Changes to your marital status.
• Having a baby, or claiming dependents - reduces your tax rates, gives access to the Child Tax Credit, tax benefits like credits for education to the Earned Income Tax Credit.
• Educational expenses - The American Opportunity Credit and the Lifetime Learning Credit can help offset $2,500 or more of your qualifying educational expenses. If you're paying off a student loan, you can deduct up to $2,500 of your interest on your taxes. The cost to obtain certain professional certifications or designations can also be written off on your taxes.
• Retirement contributions and distributions.
• Inheritance is tax-free.
• Starting or finishing an expat assignment. Expats receive an automatic 2-month extension.

Tax preparation is a real challenge for most people who are not sure if they should seek professional assistance or do it themselves. Sometimes, it is better and easier to consult with a tax professional to learn what state taxes are and to pay your tax liability on time. There is a strong demand for tax preparation services because of the task complexity and importance.

There are many tax preparation companies on the market. It’s important to read tax reviews and tax complaints before committing to a company. By researching the experience of others, you may be able to avoid many of the more common frustrations or even tax scams.  

How to Choose Online Tax Software?

Tax forms can be complicated without some sort of financial assistance. The IRS offers a partnership with many companies to file simple tax returns online, which helps a large percentage of individuals file quickly and easily without needing to pay tax preparation fees.

Generally, the more complicated your financial situation, the more expensive your tax preparation will be. What you want to avoid is overpaying a company or feeling like you were taken advantage of. Large companies that have been around for decades often have quality control measures in place. Smaller companies that seem to materialize overnight might be more suspicious. But large or small, trouble can still show up.

You have several options when it comes to filing your taxes:

• Work with a certified accountant to file. This is a good option if you have a complicated situation involving multiple investments, overseas accounts, or business taxes. Accountants can have substantial tax preparation fees.
• Take advantage of free tax preparation software and services offered by various organizations in your area. These are often sponsored by groups like AARP or local churches.
• Use discount tax preparation services through dedicated companies like HR Block or Liberty Tax in the storefront or other locations.
• Use online tax preparation software to file taxes yourself with the online preparation service’s guidance. Many individuals find these online services to be efficient and low-priced or even free based on income.

The first three options above involve finding either paid or voluntary assistance with your taxes. This is where you can help yourself by reading tax reviews before committing to a company. Negative experiences described in tax reviews can help you choose a company that might be a better fit for you.

As you prepare to file taxes, consider the options available to help you in the process. Tax preparation software makes filing your return with the IRS quick and easy, but you want to be sure you make the right choice. 

Many companies are offering tax preparation software for consumers, but they aren’t all created equally. That’s why it’s important to read tax software reviews to be sure you’re paying for and using the right service for your specific needs. 

Of course, you can file taxes yourself and skip the preparation companies. Check out the tax software reviews to find the best program to suit your needs and then, using your tax documents, enter the required information to complete the process. Although sometimes this process doesn’t work as well as one might hope. 

Among the Turbo Tax reviews, there are many customers who are frustrated about how the software works. One customer explained that they used TurboTax to help them file 2022 taxes. According to the complaint 

my son got listed on my taxes as an EIC credit for me, which I never would have done since he did not live with me last year.

The reviewer claims that the adjustment to the taxes was “without my knowledge” and asks the company:

Please fix this with the IRS and pay them the $1129 your software messed up my taxes by.

If you choose to file your taxes, you will simply create an account with an online tax company and enter the information from your own tax documents. There are many popular filing options including HR Block, Taxact, and Turbo Tax. If your tax return is simple, you may be able to file a free return. If you have a more complicated scenario, you will have to pay to use the updated version of the software to file.

You have the option to use the software independently, or you can pay for a bit of extra support to get answers or advice from the company’s representatives and tax professionals. Of course, even though the process of tax preparation using software should be simple, the reality can be more complicated for some individuals.

Another TurboTax user complained that they simply never received their tax return refund. According to the Turbo Tax review, the company did all taxes, but “the IRS hasnt them to me,” and they did not receive tax returns from last year. The post is dated December 2023, just weeks before the 2024 tax season begins.

To avoid issues like these with online tax preparation software, you should always:

• Read tax service reviews about software on a website like www.pissedconsumer.com.
• Try out a demo version and read properly all the details about the product.
• Consider using the IRS Free File to prepare and file your federal income tax return for those who qualify or the IRS Free Fillable Forms for all taxpayers. These free tax preparation online resources are affordable and secure.
• Consider using the IRS Volunteer Income Tax Assistance and the Tax Counseling for Elderly programs which are developed to provide free tax help and e-file for taxpayers who qualify.

Recent Tax Law Changes

The IRS updates elements of the tax code every year, and tax year 2024 is no exception. Among the changes for this year are adjustments in the tax brackets, increased standard deductions, and shifts to the Alternative Minimum Tax that are tied to increasing inflation. 

New tax brackets and withholding

There are new 2024 tax brackets already in effect, designed to counter inflation. The updated tax brackets are accompanied by new withholding guidelines. These limits have companies withhold less from paychecks. The tax laws updated the brackets to boost the amount of money individuals take home in their paychecks, but that might limit the amount they get back as tax returns. 

Higher standard deductions

The IRS also raised the standard deductions for this tax filing season. With a higher deduction, more of your taxes will be returned to you, helping to offset the tax complaints that the updated tax brackets might generate. The standard deduction for a single taxpayer is $13,850, or $27,700 for married couples filing jointly.

Increased contribution limits to your FSA

If you use a flexible savings account, you can now save more. The IRS now allows contributions of up to $3,050. 

Plan Ahead to File Taxes

Nobody is ever excited to pay taxes or file paperwork. From calculating IRA contributions to sorting out health insurance coverage, there can be a lot of pieces to your tax returns each year. 

Plan ahead, fill out your paperwork correctly with the help of a knowledgeable expert or software, and be sure to sort out the correct tax return dates to get it in on time. Have a great tax preparation experience? Or perhaps you want to warn others about what they should avoid this year? Why not leave a review?