Deadline day doesn’t have to be taxing
Here’s some helpful info for all last-minute filers
Tax season 2024 is nearly over. Many have already filed returns, but some people have put it off. Monday, however, is Tax Day. The deadline is always on April 15 unless that date falls on a weekend or holiday.
Here are answers to common questions that crop up during tax return preparation:
Does the IRS offer free tax preparation?
Yes. Select taxpayers in some states are able to prepare and file their 2023 federal income taxes online directly to the IRS through the Direct File pilot. And the IRS Free File program offers free filing to taxpayers with limited income.
The agency anticipated that hundreds of thousands of taxpayers, at least, will join the pilot program, which is available to individuals but not to businesses.
Initially, the pilot was available to eligible taxpayers in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington state and Wyoming.
What are the new income tax brackets?
Income tax brackets jumped by 7% for 2023. Income tax is progressive: The more a person earns, the more they pay as a percentage of their earnings. Each bracket represents a range of incomes subject to a particular income tax rate. Tax brackets rose again in 2024. Here are the 2023 tax brackets:
For individual filers:
● 37% for incomes over $578,125.
● 35% for incomes over $231,250.
● 32% for incomes over $182,100.
● 24% for incomes over $95,375.
● 22% for incomes over $44,725.
● 12% for incomes over $11,000.
● 10% for income below $11,000.
For married couples filing jointly:
● 37% for income greater than $693,750.
● 35% for incomes over $462,500.
● 32% for incomes over $364,200.
● 24% for incomes over $190,750.
● 22% for incomes over $89,450.
● 12% for incomes over $22,000.
● 10% for income below $22,000. Here is a look at how the tax brackets changed for 2024, which will be used when filing in 2025 for this year. For example, in the top individual tax bracket, the 2024 income threshold was raised from $578,126 to $609,351. This means that more than $30,000 in individual income will be taxed at 35% instead of 37%.
What is the new standard deduction?
The standard deduction for 2023 was $13,850 for individuals and $27,700 for married couples filing jointly. For 2024, it increased to $14,600 for individuals and $29,200 for married couples filing jointly.
People over 65 qualify for an additional standard deduction. For 2023, it’s $1,850 if you are single or filing as a head of household and $1,500 for married taxpayers. For 2024, the figures rise to $1,950 and $1,550, respectively.
Have itemized deductions changed?
Itemized deductions “mostly remain the same” in 2023, according to Charles Schwab. A few specifics:
● State and local taxes: Taxpayers who itemize may deduct up to $10,000 in property, sales or income taxes they have already paid to local or state governments.
● Mortgage interest: Taxpayers can generally deduct interest paid on the first $750,000 of mortgage debt, according to NerdWallet. People who bought a house before Dec. 16, 2017, may deduct interest on the first $1 million.
● Medical expenses: Only medical and dental expenses that exceed 7.5% of one’s adjusted gross income can be deducted.
What is the Social Security tax limit for 2024?
There’s a limit to how much of a person’s earnings are taxed by the Social
Security Administration, at a rate of 6.2%. (Self-employed workers pay 12.4%.)
In 2023, wages beyond $160,200 were not taxed for Social Security. In 2024, the limit rose to $168,600.
When a person reaches the Social Security tax limit, they get to keep that much more of their earnings.
What are the new IRA and 401(k) contribution limits?
Employees who participate in company retirement plans could generally contribute $22,500 to their 401(k) in 2023, up from $20,500 in 2022.
Those who didn’t participate in an employer-sponsored plan could contribute $6,500 to an individual retirement account (IRA).
People 50 and older have higher limits.
For 2024, the limits rise to $23,000 and $7,000.
What about health savings account limits, child tax credits?
HSA contribution limits were $3,850 for individual coverage and $7,750 for family coverage in 2023, according to Fidelity. In 2024, they rise to $4,150 and $8,300.
The 2023 child tax credit is worth up to $2,000 per qualifying dependent under age 17, according to NerdWallet. The income limit remains the same in 2024. The credit decreases if a filer’s modified adjusted gross income exceeds $200,000, or $400,000 for a married couple filing jointly.
Where can I find a tax refund estimator?
TurboTax, H&R Block, NerdWallet and AARP all offer tax refund estimators.
Those receiving a refund can expect it a month or less after filing, in most cases.
The IRS says it issues most refunds within 21 calendar days. Paper returns, however, can take four weeks or more. Allow time for the refund check to reach your bank account or mailbox.