The IRS started accepting 2024 tax returns this week. Are you ready? No? No problem. Here’s what you should do now:
First, gather and organize all the important tax documents. They include:
- W-2 forms from employers
- 1099 forms for freelance or contract work
- Investment income statements
- Receipts for deductible expenses
- Form 1095-A (for the Affordable Care Act)
- Child and dependent care expense records
- Mortgage interest statements (Form 1098)
- Any other income documentation
Put all printouts in a 10-inch-by-13-inch manila envelope and clearly mark it “2024 Tax Return " in a convenient, safe place. If you need more than one envelope, number it and indicate how many there are, such as “#1 of 3, #2 of 3, and #3 of 3,” so that you don’t lose track of essential documents. Some forms, like 1099-Ks for online payments, may not arrive until early February.
On your computer or an external hard drive, create a folder and sub-folders for downloaded documents such as tax statements from your online financial services companies – credit union, stock brokerage, etc. Secure the folder because sensitive personal information, including your name, address, Social Security number, account numbers, and more, are in those files. Someone who hacks your computer can steal your identity and your money.
It can help to review last year's return. What should you expect this year? What has changed since 2023, such as your employment, a new family member, an inheritance or something else that impacts your finances and life? Look closely to find new tax credits or deductions for which you may now qualify.
If filing yourself, establish an IRS online account. If you already have one, find your account ID and password. They should be stored digitally offline or on a printed page where they cannot be stolen by identity thieves.
With an online account, you can:
- View key details from your most recent tax return
- Request an Identity Protection PIN
- Get account transcripts
- Sign tax forms electronically
- View and make payments
- Create or change payment plans
Next, consider how tax-advantaged contributions could lower your tax bill. It’s not too late to make deposits into new and existing accounts. Here’s how:
- Contribute to your traditional IRA by April 15. First, make sure that it’s tax deductible. This IRS webpage explains the limitations.
- If you are self-employed, consider setting up and funding a SEP IRA. This IRS webpage shows how it works.
- Contribute to your Health Savings Account, or HSA, by April 15.
Study tax law changes. Did you know that the standard deduction for single filers increased to $14,600, while that for married couples filing jointly rose to $29,200? The higher numbers could lower your tax bill.
Now it’s time to choose your filing method. Do you want to go it alone, use tax return software, or hire an accountant to prepare and submit your return? If you have an adjusted annual gross income of $84,000 or less, you can use the IRS Free File program. It provides free software for preparing your return.
The IRS has expanded its Direct File program to taxpayers in 25 states, including Florida. You can upload your return rather than print it out and make that old-school dash for the post office at the last hour.
Beware of scammers. They come out every year at tax time, dangling generous gift card offers and other enticements to use their service when what they really will do is steal your personal information. They may even impersonate the IRS to get your data. The thieves are also after your tax refund, which you will probably never recover if they divert it from your bank account to theirs.
Also, make financial plans whether you are expecting a refund or must make a payment. Tropical Financial offers CDs and tiered-rate money market accounts.
Watch the calendar. Your employer should have sent your pay information no later than Jan. 31. So should companies for which you did contract work. Of course, April 15 is the deadline for federal tax returns. If you worked in states and cities with income taxes, visit their websites for their deadlines.
