The IRS began accepting tax returns on Monday to commence the 2024 tax season, promising improved service for taxpayers. Many people want to know if they’ll receive a larger tax refund and how quickly the IRS will disburse their funds.
Over half of Americans intend to file their taxes early this year to expedite their refund, according to a recent Intuit Credit Karma study. Last year, the average refund was nearly $3,200, a significant amount for most families.
Report – Credit Karma Study
Concerns about the timing of tax refunds, a major issue during the pandemic, are on taxpayers’ minds. The IRS, aided by the Inflation Reduction Act, now has additional funding to address this. The funds will be used to hire more customer service representatives and enhance services like the “Where’s My Refund?” tool.
John Geantasio, a CPA, emphasizes the benefits of filing early, citing not only the prompt receipt of money but also the protection against fraudsters. Some scammers attempt to file early using taxpayers’ data, aiming to claim refunds before the legitimate filers get the chance.
For a smoother experience this tax season, consider these insights before filing in 2024.
2024 Tax Filing Season Dates and Details
Filing for taxes in 2024 began on January 29, and the IRS will be accepting federal tax returns until April 15. However, residents of Maine and Massachusetts have a slightly extended deadline until April 17 due to state holidays. Additionally, those in federally declared disaster areas get extra time.
If you find yourself needing more time to organize your documents, consider requesting a filing extension. This extension allows you until mid-October to submit your tax returns. It’s important to be aware of these dates and make necessary arrangements to avoid any potential penalties.
Maximize Tax Returns 2024: Deductions, Refunds, and Payments
As we have already mentioned, the Tax filing season officially began on January 29.
Therefore, make sure you are not missing any IRS guidelines or any changes in your financial situation that might affect your taxes. Here’s what you need to know:
1. Standard Deduction vs. Itemizing: Understanding Your Options
When filing taxes, a crucial decision is whether to claim the standard deduction or itemize deductions. Most taxpayers opt for the standard deduction, and this year, even more, may choose it due to the increased amount.
For 2023, the standard deduction for married couples filing jointly is $27,700, up by $1,800 from 2022. Single taxpayers and those married filing separately have a standard deduction of $13,850, an increase of $900 from the previous year.
Certified Public Accountant, John notes that although the standard deduction has risen, certain itemized deductions, like the SALT cap rate, remain unchanged. The SALT cap, limiting the deduction of state and local taxes to $10,000, was implemented in the 2017 tax overhaul.
IRS spokesman Eric Smith also suggested that some individuals who previously found it beneficial to itemize may now find it more sensible to take the standard deduction in 2023. This change is particularly relevant for higher-income taxpayers, as the significance of the standard deduction has increased for many in these brackets. In 2022, approximately 30% of taxpayers with incomes of $1 million or more chose the standard deduction, according to IRS data.
2. High Earners Face Higher Tax Obligations at Filing
If you’re a typical taxpayer, you usually get a refund. IRS data reveals that only 26% of filers had tax due in their 2022 returns. But for those earning $1 million or more, a substantial 46% found themselves owing taxes at filing.
Rising Costs: Missing estimated tax payments and not paying enough throughout the year has become pricier. Thanks to the Federal Reserve’s interest rate hikes, rates for interest-based tax penalties have also gone up.
Proactive Approach: To minimize the impact, it’s advisable to pay any tax due sooner rather than later, as the calculation is based on a daily factor. Every day counts.
Avoiding Penalties: If you file by the April 15 deadline but don’t pay all owed taxes on time, you’ll face a late payment penalty. This penalty is 0.5% for each month, up to 25% of the unpaid tax amount, from the due date until it’s fully paid.
Costly Delays: The late payment penalty can accumulate significantly, especially for those with substantial balances. Paying the tax owed around the October 15 extension due date results in a significantly higher bill compared to making a payment in April.
Tax Bracket Adjustments for 2023 and 2024: What You Need to Know
The IRS has made changes to tax brackets for both 2023 and 2024 due to inflation. In 2023, brackets increased by about 7%, and for 2024, the adjustment is approximately 5.4% higher.
Possibility of Bigger Tax Refunds in 2024
Some individuals may receive larger refunds in 2024, especially if their income didn’t keep up with inflation. For example, if your wages increased by 4%, which is less than the 7% IRS adjustment, you might get a bigger refund – possibly 10% more than the previous year.
According to Credit Karma, about 75% of Americans expect a tax refund this year, while 25% anticipate more money in their IRS check.
2024 IRS Refund Schedule: What to Expect
When you file your taxes on January 29, the earliest possible day, the IRS aims to get your refund to you by February 19. Most taxpayers usually receive their refunds within 21 days. It’s important to note that this is a guideline, not a guarantee.
The IRS mentions that some returns may take more time for review, potentially extending the process beyond 21 days. This turnaround time primarily applies to electronic filings. If you opt for a paper return, be aware that processing can take considerably longer.
Maximize Your Tax Refund Speed
The most efficient method to expedite your tax refund is by filing electronically and opting for direct deposit, as advised by IRS Commissioner Danny Werfel. In the fiscal year 2022, a whopping 93.8% of individual taxpayers embraced electronic filing, streamlining the process.
Ensure Swift Direct Deposits
When choosing direct deposit, meticulously verify your banking details, including routing and account numbers. Mistakes in this information might lead to the IRS having to resort to mailing your payment by check, causing delays.
Avoid Tax Return Guesswork
Accurate reporting is crucial to prevent delays in refunds. Tax return mistakes, such as missing or inaccurate Social Security numbers, misspelled names, and math errors, can trigger flags in the IRS systems. Ensure you have all necessary tax forms to file a complete and error-free return.
Takeaway: Prioritize accuracy and electronic filing with direct deposit to swiftly secure your tax refund.
Updates on Child Tax Credit Expansion
Right now, there’s a deal on the table to expand the Child Tax Credit (CTC). This deal may bring about retroactive changes for the 2023 tax year, the one people are currently filing for. If this deal goes through, it could mean a more generous refund for millions of parent
Conclusion:
Don’t wait until the last minute; make sure to start early. This way, you can easily gather all the necessary documents, which will help reduce stress. When it comes to refunds, choose direct deposit for the quickest processing. Stay informed about potential changes in tax laws, as new rules or deductions may impact your taxes.
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