The IRS Introduces 2024 Tax Time Guide

 

Tax season is a stressful time. The IRS offers taxpayers a helping hand with a four-part weekly series, Tax Time Guide. It provides everything you need to know about completing your 2023 return.

If you missed it, here are some key essentials that will keep you on track.

  • Tax Form Deadlines: The deadline for the Form 1040 Individual Income Tax Return and the 1040-SR U.S. Tax Return for Seniors is April 15, 2024. Taxpayers in Maine and Massachusetts will have until April 17, 2024, to file due to official holidays observed in those states.
  • Have All Documents Prepared: Taxpayers are advised not to file taxes until they have received all their tax forms. Filing without the necessary documents can cause delays and errors.
  • Review Documents Carefully: Review documents carefully to ensure they are free of errors and do not have any missing information. If issues are found, taxpayers should contact the sender to request corrections.
  • Create an IRS Online Account: An IRS online account will provide information on payment history and past taxes. Organized records make the tax return process easier and prevent taxpayers from overlooking credits and deductions.
  • Renew Your ITIN Number: An Individual Taxpayer Identification Number (ITIN) is assigned to taxpayers who are not U.S. citizens. They must be renewed every three years. Renewals should be handled before tax returns are submitted. If your ITIN has expired, you may still file a return, but there may be processing delays.

Notes on Credits and Deductions

Standard Deduction Increases

The standard deduction has increased as follows:

  • Single or married and filing separately- $13,850,
  • Head of household- $20,800,
  • Married and filing jointly or qualifying survivor spouse- $27,700.

Changes in Child Tax Credit (CTC)

The enhanced credit for qualifying children under 6 and 18 has expired. The 2023 CTC is $2000 for each qualifying child. The credit will begin to phase out where AGI income exceeds $200,000 or $400,000 for joint returns.

The CTC that can be claimed as a refundable credit is limited, but the maximum Additional Child Tax Credit ACTC increased to $1500.

The increased age limits for qualifying children have expired. Children must be under 17 at the end of 2023 to receive the credit.

New Clean Vehicle Credit

The credit for purchasing a new plug-in electric vehicle is now called the New Clean Vehicle Credit. The maximum credit amount and some requirements have changed. Taxpayers can report the credit on Form 8963, Qualified Plug-In Electric Drive Motor Vehicle Credit, and Form 1040, Schedule C.

More information on credits and deductions is available in Publication 17, Your Federal Income Tax (for individuals) Taxpayer Guide.

1099-K Reporting Requirement Remain the Same

To avoid confusion, the IRS will delay the new reporting threshold on Form 1099 Payment Card and Third-Party Network Transactions for 2023. The previous thresholds will remain in place.

The IRS has also published a fact sheet with more information to assist taxpayers with 1099 reporting. Here are some guidelines to be aware of:

Reporting Requirements: Taxpayers who accept credit, debit, or gift cards for goods and services will receive a 1099 from their payment processor or payment settlement entity regardless of how many payments they processed. If the taxpayer received over $200,000 from over 200 transactions, the payment processor or entity may send one 1099, or multiple 1099s. Taxpayers must report all taxable income, whether they received a 1099 or not.

Taxable Payments: Personal payments like monetary gifts and repayments are not considered taxable expenses. Taxpayers should not receive a 1099 for these payments. Mark those payments as personal on your records to avoid confusion.

Visit IRS.gov/1099K or Form 1099-K FAQs to discover more information on what should be on a 1099 form and what to do if the information on your 1099 form is incorrect.

Consider the Direct File Pilot Program

The Direct File Pilot Program was launched by the IRS for the 2024 tax season. It allows taxpayers to file their taxes for free directly with the IRS.

The program will be available to taxpayers in 12 pilot states with relatively simple tax reporting needs who report certain types of income and claim limited credits and deductions. The 12 states participating include:

  • Arizona
  • California
  • Florida
  • Massachusetts
  • Nevada
  • New Hampshire
  • New York
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

Taxpayers can check their eligibility at directfile. irs, gov.

Direct File is currently in internal testing mode and will be more available in mid-March. Taxpayers can sign up at Direct File Pilot News to find out the latest updates and be notified when the program is available in their state.

Taxpayers can also stay up to date on the latest news by browsing the IRS.gov website and reading Publication 17, Your Federal Income Tax (for Individuals). Latino Tax Pros is also always here to help. Contact us for the answers to your tough tax questions.

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