Even though Congress didn’t make major changes for this year, there are some new wrinkles to be aware of, especially for those who sell things online, bought an electric vehicle, or prefer to get their refund as a savings bond.
Taxes might also be slightly less aggravating now. The Internal Revenue Service upgraded its online services, adding features and making it easier to check the status of refunds.
“The IRS has put a lot of effort into what it calls the taxpayer experience,” said Larry Gray, a certified public accountant in Rolla, Mo., who is the government liaison for the National Association of Tax Professionals.
Before getting started, remember that the complex rules for income taxes change a bit every year, including annual inflation adjustments for tax brackets and the standard deduction. A bigger revamp could be in store for next year and beyond, depending on how President Trump and Congress address the fate of the 2017 tax cuts, which expire on Dec. 31.
It takes taxpayers an average of 13 hours and $290 to prepare and file, according to the IRS. Often, it is worth it. Last year, tax refunds averaged $3,138, according to the IRS. Taxpayers who file electronically and choose direct deposit should get the payments within 21 days.
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The IRS has put a lot of effort into what it calls the taxpayer experience.”
Here are some key changes for this year:
Deadlines and disaster relief
Taxes for 2024 returns are due April 15, for most filers. There are exceptions. The roughly 10 million taxpayers who live in Los Angeles County have an extension until Oct. 15 to file and pay to help those recovering from the recent wildfires. They also can delay paying quarterly estimated taxes.
Taxpayers in certain 2024 disaster areas might benefit from disaster relief on their 2024 returns or by amending their 2023 returns.
A tax law passed in December also helps victims of certain disasters in 2020 through 2024 claim losses on their tax returns above previous limits. It eliminates the requirement that personal casualty losses must exceed 10% of adjusted gross income, and allows taxpayers to claim a loss even if they don’t itemize deductions.
Richard Shorin, a CPA in Ambler, Pa., just completed an amended 2022 tax return for clients in Florida who had a substantial uncovered loss after their house was damaged in Hurricane Ian. They will get a refund of almost $60,000.
Sell anything online? You might get a 1099-K
Income you get from online sales of concert tickets, goods and services is generally taxable. The threshold for platforms like PayPal and eBay to send 1099-Ks to people dropped to $5,000 for tax year 2024, down from $20,000. A copy also goes to the IRS. That means millions more Americans will get the forms to make sure they account for the income on their returns.
Whether you get a 1099-K or not, if you are in business, you need to report the income on your tax return.
If you get one for selling personal items like stuff in your basement for a loss, you wouldn’t owe tax, but you would need to disclose the sale to the IRS. If you sold personal items for a gain, you are required to report it and pay any taxes due.
Secure your tax data with a PIN
The IRS says it expects more people to sign up for online accounts this tax season. This allows you to view payment status, get an identity protection PIN and respond to IRS messages.
An IP PIN prevents someone else from filing a tax return with your Social Security number.
Dannie Lynn Murphy, a Seattle-based enrolled agent—an IRS-credentialed tax pro—recommends that clients get one if they have been a fraud victim or are going through a divorce. “The downside is, basically, do you remember what it is?” she said of the PIN.
If you bought an EV in 2024
Many electric-vehicle buyers took a $7,500 tax credit at the dealership at the time of sale, effectively an instant discount. But they still need to report the purchase on their tax returns to prove that they were eligible for the credit. If it turns out their income is over the income limits for the credit, it will get clawed back, Murphy said.
Tax penalties
More taxpayers are getting hit with penalties for underpayment, often due to gig income that wasn’t subject to withholding, said LuSundra Everett, an enrolled agent in Chester, Va. One new client faced $7,000 in penalties and interest on a $100,000 tax bill for failing to pay in estimates over the course of the year, she said.
The number of taxpayers reporting the penalty for failing to pay estimated taxes rose more than 15% to 14 million in fiscal-year 2023, according to the IRS. Paying estimates on time, or adjusting your withholding, will eliminate the penalty, which is set quarterly and is currently 7%.
More ways to file your taxes free
The IRS is expanding Direct File, a free online tax-filing service for people with simple returns, to 25 states this year, up from 12 last year. The service will also now cover more tax situations than last year, such as the premium tax credit for marketplace health insurance and deductions for health-savings-account contributions.
The Treasury Department estimates that more than 30 million people are eligible.
Taxpayers with an adjusted gross income of $84,000 or less also can file free using commercial software via IRS Free File. The IRS partners with eight tax companies.
IRS-certified volunteers provide free tax help across the country.
No more I bonds
This year, the Treasury ended a program that let taxpayers direct part or all of their refund into savings bonds. Still, you can use Form 8888 to split your direct-deposit refund between two or more accounts, including a savings account, a traditional or Roth IRA or education savings account.
IMPORTANT DISCLOSURES Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2021.