As the tax season commenced on January 27, the Internal Revenue Service (IRS) has been inundated with millions of tax returns as individuals rush to secure their refunds. This rush is not merely for economic convenience but rather out of necessity; a recent survey by Credit Karma revealed that nearly 40% of taxpayers are counting on their refunds to help manage their living expenses this year. The IRS is anticipating over 140 million individual tax returns for the 2024 fiscal year, paving the way for a significant influx of financial activity leading up to the April 15 deadline.
Given the integral role of tax refunds in many Americans’ financial strategies, it’s crucial for filers to be well-informed before submitting their returns. With so much at stake, understanding the available resources and options can make the difference between stress and success during this busy period.
For those looking to minimize costs, the IRS has developed several opportunities for free tax filing. Notably, the Direct File program, which is available to over 30 million taxpayers, offers a streamlined option for individuals who are eligible. This initiative has expanded its reach to 25 states and is equipped to handle a broader array of tax situations than prior years, according to remarks made by former IRS Commissioner Danny Werfel in early January.
Additionally, the IRS Free File program presents another avenue for taxpayers to file without incurring costs. This program is aimed specifically at individuals with an adjusted gross income (AGI) of $84,000 or less, with approximately 70% of taxpayers falling within this range. Despite its accessibility, a staggering number of eligible filers do not take advantage of IRS Free File, highlighting a potential gap in taxpayer education, as noted by Tim Hugo, executive director of the Free File Alliance.
For individuals seeking more personalized assistance, the Volunteer Income Tax Assistance (VITA) program also offers no-cost filing help for those with an AGI of $67,000 or less. This program is particularly beneficial for those needing a little extra guidance as they navigate the complexities of tax filing.
While April 15 is a critical deadline for most filers, certain individuals may have longer to submit their returns. For instance, those affected by natural disasters—like California wildfire victims—are granted extensions to both file their returns and remit any taxes owed. The IRS has extensively cataloged tax relief measures, allowing affected filers to understand their specific entitlements, particularly for disaster-related claims. Furthermore, an extension of tax relief for certain victims through early 2025 was enacted by Congress in December, providing extended support for those adversely impacted.
Such extensions can significantly ease the financial burden on affected taxpayers, allowing them more time to prepare accurate and complete returns, which can be crucial for maximizing their refunds.
While expedience may be tempting, experts emphasize the importance of thorough preparation before filing. Certified public accountant Brian Long from Wealth Enhancement in Minneapolis advises taxpayers to ensure they have all necessary tax documentation in hand before submission. Filing prematurely without complete information can result in the IRS flagging the return for discrepancies or missing details, thereby delaying processing times.
To aid in this endeavor, Long recommends using the previous year’s return as a reference. This can help filers confirm they are not overlooking essential forms or deductions, ensuring they maximize their claims. It’s important to note that while many tax documents are available by January, some may not arrive until later—ranging from mid-February to as late as March. Therefore, patience and preparation are critical components of a successful filing season.
As taxpayers head into the 2024 filing season, knowledge is paramount. Understanding available resources, recognizing special circumstances, and ensuring thorough preparation can help taxpayers navigate their returns more effectively. With financial security on the line for so many, the importance of an informed approach cannot be overstated. By leveraging the tools at their disposal, individuals stand a better chance of filing accurately and receiving the refunds they depend on.