Tax season is officially here, and with it comes fresh regulations and adjustments you need to know about. These changes might have a significant effect on your tax return. Whether you’re filing your own taxes or getting help from professionals like Kondler & Associates, CPAs, read this guide to make sure you’re prepared.
What's the Filing Deadline for 2023 Taxes?
Mark your calendars for April 15, 2024! This is the 2023 tax filing deadline for most Americans.
But what if you can’t make it? Don’t worry; you can apply for a six-month extension, which will give you until October 15, 2024. However, please understand that an extension to file does not give you more time to pay. Any money you owe the IRS is still due on April 15.
Residents in Maine and Massachusetts have a different deadline. State holidays mean they don’t have to file or pay taxes until April 17.
How Has Your Income Tax Bracket Shifted?
Your tax bracket determines the percentage of federal taxes you’ll owe and is based on your income. For 2024, changes to the income brackets could mean a different bill for you. The ranges are adjusted for inflation and can also be affected by tax reform or other legislative changes.
Here are the first three brackets:
Tax Rate
Single Filers
Joint Filers
10%
$0 to $11,000
$0 to $22,000
12%
$11,001 to $44,725
$20,001 to $89,450
22%
$44,726 to $95,375
$89,451 to $190,750
The Standard Deduction Is Higher
The standard deduction is an amount set by the IRS that reduces your taxable income. For 2024, the standard deduction has increased to:
- $13,850 for single filers
- $20,800 for heads of household
- $27,700 for married couples.
The standard deduction makes sense for taxpayers who don’t itemize their deductions. However, to ensure the standard deduction provides the most tax benefits, it’s smart to speak with a professional.
The Increased Estate Tax Exemption
Estate taxes can be a significant consideration for those with substantial assets. The good news for 2024 is that the estate tax exemption has been raised to $12,920,000, which means you can give more to your loved ones without incurring estate taxes.
The annual gift exclusion has also increased. This is money that you can give loved ones tax-free without touching your lifetime estate and gift tax exemption. The new limit is $17,000 per person you gift.
Higher Contribution Limits for Retirement Accounts
If you have an individual retirement account (IRA) or a 401(k), your contribution limits have increased for 2024. Individuals under 50 can contribute a maximum of $6,500, while those over 50 can contribute $7,500. Your particular contribution limit varies with your income.
Don't Overlook These Common Mistakes
Tax season is often stressful, so making a mistake isn’t surprising. Some common mistakes include:
- Forgetting to include all sources of income, including freelance and gig work
- Miscalculating your credits and deductions
- Filing the wrong status
- Missing the tax credits
How to Utilize Tax Credits to Their Fullest
Tax credits are a dollar-for-dollar reduction in the actual tax you pay. Various tax credits are available, from the Child Tax Credit to the Lifetime Learning Credit. Make sure you know all the tax credits you might be eligible for.
Final Advice Before You File
With a bit of preparation and knowledge, filing your taxes becomes far less daunting. Keep track of important deadlines, take advantage of any available tax breaks, and stay updated on any changes in tax regulations. If you need clarification on any aspect of your taxes, Kondler & Associates, CPAs, can help.
Don’t wait until the last minute; call us today and start preparing your 2023 tax return.
