Monday, February 26, 2024

Tax Season 2024: What You Need To Know Before Filing Your Taxes

HomeFinanceTax Season 2024: What You Need To Know Before Filing Your Taxes

The holiday season is winding down, and Americans are starting to turn their thoughts toward the annual chore of filing income taxes. While Tax Day 2024 may seem far off, tax experts advise filers to start preparing sooner than later.

This article provides essential information on critical dates, changes to the tax code, and tips to make the process smoother. Whether you file as soon as possible to get your refund quickly or wait until the last minute, understanding the details now can save time and money when tax season arrives.

When Does The 2024 Tax Season Start?

The 2024 tax filing season will likely commence in late January, as it did in 2023. The IRS generally begins accepting returns in the last week of January, marking the official start of tax season.

While the agency has not yet announced the precise start date for 2024, filers can expect a similar timeline as last year. The key takeaway is not to submit 2023 returns before the IRS systems open in January to avoid rejections and delays.

When Is The 2024 Tax Deadline?

The due date for filing federal individual income tax returns is always April 15 for most taxpayers. Because that date falls on a Monday in 2024, there is no extension for weekends or holidays.

All 2023 returns and payments must be submitted to the IRS by 11:59 pm on Monday, April 15, 2024, unless you qualify for an extension or live in a state with a later deadline.

What Are The New 2024 Tax Brackets?

The IRS adjusted federal income tax brackets for inflation in 2023 and will revise them again before the 2024 tax year. The current seven tax rates remain the same, but the income ranges defining each bracket increase by roughly 7%.

For single filers in 2024, the new taxable income thresholds are projected to be:

  • 10%: Up to $11,000
  • 12%: $11,001 to $44,975
  • 22%: $44,976 to $95,375
  • 24%: $95,376 to $182,100
  • 32%: $182,101 to $231,250
  • 35%: $231,251 to $578,125
  • 37%: Over $578,125
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The corresponding income ranges for married couples filing jointly are roughly double the thresholds for single filers.

Higher income brackets mean more of your income is taxed at lower rates. However, some credits phase out at higher levels because of inflation adjustments.

How Much Is The 2024 Standard Deduction?

Standard deductions are increasing by about 7% for 2024 returns. Single taxpayers can deduct $14,800, up from $13,850 in 2023. Married couples filing jointly can deduct $29,400, up from $27,700.

If you don’t itemize deductions, claiming the higher standard deduction can lower your taxable income for 2024. Taxpayers over 65 get an extra standard deduction – $1,900 if single and $1,650 per married spouse age 65 or older.

Have Itemized Deductions Changed In 2024?

Most itemized deductions remain the same for 2024 returns. Key deductions include:

  • State and local taxes: Remains capped at $10,000 total for property, income, and sales taxes.
  • Mortgage interest: Deductible on the first $750,000 of mortgage debt, or $1 million if the home loan originated before December 16, 2017.
  • Medical expenses: Qualifying costs exceeding 7.5% of adjusted gross income can be deducted.
  • Charitable donations: Cash gifts to qualified organizations are fully deductible if you itemize.

Higher standard deductions mean fewer taxpayers now itemize, but these write-offs can still yield savings if total deductions exceed the standard amount.

What Are The New 2024 Retirement Contribution Limits?

Contribution limits for tax-advantaged retirement accounts, such as 401(k)s and IRAs, typically rise each year to account for inflation. For 2024, the projected limits are:

  • 401(k) plans: $21,500 contribution limit, up from $22,500 in 2023. Catch-up contribution for workers 50+ increases to $7,500.
  • IRAs: $6,500 annual contribution limit, up from $6,000. Catch-up limit rises to $1,000.
  • SIMPLE IRAs: $15,500 salary deferral limit, up from $15,000. Catch-up increases to $3,500.
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Contributing to a traditional 401(k) or IRA can reduce your taxable income. Roth accounts do not offer an immediate deduction but provide tax-free growth.

How Much Can I Contribute To An HSA In 2024?

If you have a qualifying high-deductible health plan, you can contribute pre-tax or tax-deductible dollars to a health savings account (HSA). This can help pay current medical expenses or accumulate savings for future healthcare needs.

For 2024, the HSA contribution limits rise to:

  • $3,850 for individual coverage, up from $3,850 in 2023.
  • $7,750 for family coverage, up from $7,750.
  • $1,000 catch-up contribution if age 55 or older.

HSAs offer unique triple tax benefits and the money rolls over year to year if unspent. Just save records of medical expenses in case the IRS ever questions withdrawals.

Who Qualifies For The Child Tax Credit In 2024?

The enhanced child tax credit enacted during the pandemic has expired. For 2024 returns, the credit reverts to $2,000 per qualifying child under age 17. To claim the full credit as a refund, your tax liability must exceed the credit amount.

The credit begins phasing out at higher income thresholds:

  • Single filers: Credit reduced when modified AGI exceeds $200,000
  • Married filing jointly: Credit reduced when modified AGI exceeds $400,000

You must provide a Social Security number for each child claimed. Children ages 17 to 24 may also qualify you for a $500 nonrefundable credit if they meet certain criteria.

Should I File As Single Or Head Of Household?

Single taxpayers who financially support a dependent, like a child or elderly parent, may qualify to file as head of household instead. This provides larger standard deductions and more favorable tax rates than the single filing status.

To claim head of household, you must be unmarried and have provided more than half the cost of maintaining a home that was the main residence for you and a qualifying dependent for more than half the year.

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Before deciding, compare single and head of household taxes both ways to see which results in a lower liability or bigger refund.

When Can I Expect My 2024 Tax Refund?

The IRS issues most federal tax refunds within 21 calendar days of receiving your return. However, paper returns can take 4-6 weeks to process.

Filing electronically and requesting direct deposit of your refund to a bank account will typically get your money to you faster. Most refunds are issued within 14 days when e-filing with direct deposit.

Taxpayers claiming certain credits, like the earned income tax credit, may face longer waits as the IRS reviews eligibility. The “Where’s My Refund?” tool at IRS.gov can check the status.

How Do I Get Started On My 2024 Tax Return?

Now is the time to start gathering documents and receipts you will need to file an accurate 2024 return. Locate forms showing your 2023 income, deductions, estimated tax payments, and prior year refunds or liabilities.

Make a list of any life changes in 2023 that may affect your taxes, like a new home or child. Review last year’s return to ensure continuity. Consider consulting a tax professional if you had major life events.

The key is getting organized early. With preparation, you can file as soon as possible in 2024, claim credits you deserve, maximize deductions, avoid errors, and receive your maximum refund quickly.

The information provided here should give taxpayers a head start on understanding the key changes and timeline for the 2024 filing season. But every tax situation is unique. Be sure to stay updated on the latest IRS announcements and guidance for the 2024 tax year. With a thoughtful approach, you can file your taxes accurately and efficiently next year.

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Mezhar Alee
Mezhar Alee
Mezhar Alee is a prolific author who provides commentary and analysis on business, finance, politics, sports, and current events on his website Opportuneist. With over a decade of experience in journalism and blogging, Mezhar aims to deliver well-researched insights and thought-provoking perspectives on important local and global issues in society.

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