Tuesday, July 23

2024 Tax Season Is Close! Are You Ready?

How to Prepare for The 2024 Tax Season:

The end of the 2024 tax season for most American citizens is April 15, 2024. If you can’t file before that date, don’t worry. There are still plenty of options for you. You can file for an extension. Filing an extension will give you an additional six months until October 15, 2024, to submit a complete return.

If you still believe you will owe taxes, you need to estimate how much you owe and pay the amount due along with the extension form. You can also file a late return without an extension. If you do not owe taxes or you simply expect a refund, you might not owe a penalty.

If you owe taxes, you could be charged a penalty for filing late. If you do not owe taxes or expect a refund, then you don’t have to worry about penalties. Still, it could be best to file as soon as you can to receive your refund or to make sure you don’t owe a balance. Here are some ways in which you could file a return for free and claim your tax refunds.

tax season
Photo by Miha Creative from Shutterstock

More about filing your tax returns

If you have an income below the standard deduction threshold for last year, which is $13,850 for single filers and $27,700 for those married jointly, you might not be required to file a return. But you might want to file one anyway.

In most cases, especially for people with low incomes, all these features could increase the amount you might receive in a refund. There are other key factors to consider, so make sure you take everything into account.

Over-withholding

If you worked in 2023 and had taxes withheld from your paycheck, you might still be able to get some of that “over-withholding” back in your refund. Make sure you get W2 forms from all your employers and enter that information into the tax form when you complete it.

The earned income tax credit

If you worked or were self-employed and declared earned income under $63,698, you might receive the Earned Income Tax Credit (EITC) by simply filing a tax return. If you are eligible for such credit, the maximum amount you might receive is:

  • $600 if you have no dependent children
  • $3,995 if you have one qualifying child
  • $6,604 if you have two qualifying children
  • $7,430 if you have three or more qualifying children

The child tax credit, or CTC

The Child Tax Credit comes in the maximum amount of $2,000 per qualifying child. Up to $1,500 is refundable. If you want to know whether or not you qualify for the CTC, you must have earned more than $2,500.

There are different ways to file your taxes

If you are one of the estimated 100 million people who are eligible to file your tax return for free, then you can keep all that refund money by choosing one of the options down below.

In-person, full-service, free tax preparation

If you meet the minimum criteria (enlisted below), you might be able to take advantage of the in-person, full-service tax preparation services through the IRS Volunteer Income Tax Assistance (VITA), AARP Foundation Tax-Aide, and Tax Counseling for the Elderly (TCE) programs. All these free programs have operated for more than 50 years, and they all use IRS-certified tax preparers and meet rather high IRS quality standards.

This also means you can be assured that you will have quite an accurate return. In fact, you can schedule an appointment with VITA/TCE and Tax-Aide if you make $60,000 or less, have a disability, have limited English skills speak English as a second language, and are 60 and older.

Mention: There might be some VITA or AARP Tax-Aide sites that are open throughout the year. Some close at the end of the tax season. When you search for a site, make sure you check the “Dates open” column to find a site that plans to remain open after April 15, 2024.

Remote, full-service, free tax prep

You are perfectly capable of preparing your own return with a little help from IRS-certified volunteers, especially when you need it through the MyFreeTaxes platform. Mind you, this applies if your income is $73,000 or less.

You can get connected to VITA providers all over the country if you have your return prepared by simply signing up through GetYourRefund if your income is $66,000 or less.

tax season
Photo by chayanuphol from Shutterstock

Free self-preparation

If your income is $73,000 or less, you could be eligible to prepare and file federal income tax returns for free online. You only need to use guided tax preparation software on the IRS platform. Other eligibility for free products could differ depending on providers.

Some might even charge you a fee to file state returns. Make sure you review offers very carefully and access the service through the IRS link, rather than going right to the website for the guided tax preparation software.

Free tax filing for servicemembers

You can easily prepare and file your tax returns for free using MilTax. You need to be:

  • an active-duty service member, spouse, or dependent child of an eligible service member;
  • a member of the National Guard and Reserve, no matter your activation status;
  • retired and honorably discharged service member, including Coast Guard veteran, within 365 days of your discharge;
  • a family member who’s managing the affairs of an eligible service member while the service member is deployed;
  • a designated family member of a seriously injured service member who is incapable of handling their own affairs;
  • eligible survivor of active-duty, National Guard;
  • a member of the Defense Department Civilian Expeditionary Workforce.

Here are some factors to consider before using a fee-based tax preparer

Before deciding whether you want to pay someone to prepare your taxes, here are a couple of things you need to consider! The fees you pay might be based on the complexity of your return. If, for instance, you have multiple sources of income, including self-employment, are claiming some tax credits, or even have had changes in your life circumstances during the course of the year, you are more likely to pay more if you have a simple return.

Even if you have a complex return, you might still be eligible to file your taxes for zero costs, as long as you meet the guidelines listed above. You will want to check with the free provider of your choice first before paying to have your taxes done.

How to understand your refund anticipation checks and refund advance loans

Refund Anticipation Check (RAC)

If you use a fee-based tax preparer and you don’t have the needed filing fees, some tax preparers could offer you a refund anticipation check, or RAC. A RAC will let you pay the tax preparation fee out of your refund instead of upfront.

When you receive that refund, the tax preparer might take out the RAC fee, filing fee, and any other service fee they charged you. A RAC doesn’t refund you faster. The fees usually range from $30 to $50.

Refund Advance Loan (RAL)

Some fee-based tax preparers could offer you a refund advance loan, or RAL, so you can get a portion of your expected refund in advance. Tax preparers might call them a “tax refund advance”. However, if you decide to make an advance, you might need to borrow money upfront from the preparer.

As soon as the IRS issues your refund to the tax preparer, you will receive the remaining amount, minus the RAL fee, and any other service fees they might have charged you. The amount of a RAL is generally a percentage of your estimated tax refund.

All tax preparation firms differ. Some firms might offer RALs with zero fees or interest, but others could charge you fees and interest. Also, keep in mind that when you decide to file electronically, the IRS generally issues most refunds in less than 21 days, so you could end up paying a big RAL fee for a short-term advance.

And since we’re at it, good luck in this tax season, and make sure you have all you need! By that, I generally refer to money and a good calculator.

If you found this article useful, you might also want to check out: 7 Hidden Home Expenses That Will Drain Your Bank Account

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