The IRS has officially announced that 2023 annual tax filing will begin on Monday, January 29, 2024. This is the date you can file your annual taxes with an accountant,
Remember, the tax filing deadline for 2023 taxes is Monday, April 15, 2024. It’s essential to mark these dates on your calendar to ensure timely filing and avoid any late penalties. In addition to those key dates, we'll also cover in this guide:
How to prepare for tax season
How to file taxes
How to file a tax extension
What happens if you don't file taxes
Preparing for Tax Season 2024
As we approach the 2024 tax season, starting on January 29, it’s crucial to be well-prepared to ensure a smooth and efficient filing experience. Whether you’re an individual, a self-employed professional, or running a small business, the right preparation can make a significant difference.
Gather Essential Documents
Start collecting all necessary documents early. This includes W-2 forms from employers, 1099 forms for any freelance or contract work, interest statements from banks, and documentation for any other sources of income.
Organize receipts for deductible expenses such as education expenses, healthcare costs, and business-related expenditures, or link a card to an expense tracking app like Everlance and classify your expenses as work or personal
Review Changes in Tax Laws
Stay informed about any changes in tax laws that could affect your filings. This could include adjustments in tax brackets, deductions, credits, and more.
Consider consulting a tax professional or using reliable tax software that is updated with the latest tax codes.
Utilize Digital Tools for Efficiency
Tools like Everlance can greatly simplify the process of tracking business expenses and mileage. Their automatic tracking features ensure that you capture all potential deductions, saving you time and maximizing your return.
Digitize your documents where possible. This not only helps in organizing your records but also makes it easier to share them with your tax preparer.
Plan for Any Tax Payments
If you expect to owe taxes, start planning for how you’ll make these payments. This is particularly important for self-employed individuals who might not have taxes withheld from their income.
The final deadline for tax filing in 2024 is April 15. Mark this in your calendar and set reminders as the date approaches.
Understanding the Tax Filing Process
Navigating the tax filing process can be daunting, especially with ever-evolving tax laws and regulations. Understanding the steps involved in filing your taxes for 2024 is crucial for a smooth and successful experience.
Tax Filing Status
Determine your filing status, which can be single, married filing jointly, married filing separately, head of household, or qualifying widow(er) with a dependent child. Your status affects your filing requirements, standard deduction, and eligibility for certain credits.
Decide on a Filing Method
You can file your taxes electronically (e-filing) or by mailing a paper return. E-filing is generally faster, more secure, and offers quicker refunds. Consider using IRS-approved software or a tax professional for e-filing.
Report All Income
Accurately report all sources of income, including wages, salaries, tips, interest, dividends, and earnings from self-employment. Use the appropriate forms, like W-2s for employment income and 1099s for other income types.
Understand and Claim Deductions
Deductions reduce your taxable income, thereby lowering your tax liability. Familiarize yourself with the various deductions available, especially when you're self-employed. Remember, the "standard deduction" on personal income taxes does not impact your ability to write off business expenses on your self-employed taxes.
Know Your Tax Credits
Tax credits, like the Earned Income Tax Credit (EITC) or Child Tax Credit, can directly reduce the amount of tax you owe. Understand the eligibility criteria for these credits to take full advantage.
File and Pay Your Taxes
Once your return is prepared, file it by the deadline (April 15, 2024). If you owe taxes, ensure you pay by this date to avoid penalties and interest. If you’re expecting a refund, consider opting for direct deposit for faster receipt.
Keep Records and Documentation
After filing, keep copies of your tax return and all supporting documents for at least three years. These records are crucial in case of an IRS inquiry or audit.
Post-Filing Follow-Up
After filing, you can check the status of your return and refund using the IRS’s “Where’s My Refund?” tool. Be prepared to respond to any IRS notices or requests for additional information.
How To File A Tax Extension
Filing a tax extension can provide you with extra time to prepare your tax return without incurring late filing penalties. Remember, a tax extension extends the time to file your return, but not the time to pay any taxes you owe. You’re still expected to estimate and pay any owed taxes by the original deadline (April 15, 2024) to avoid potential penalties and interest.
In order to file an extension, follow these steps:
Fill Out IRS Form 4868
To request an extension, complete Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.”
You can fill out this form electronically through most tax software programs, or download it from the IRS website and fill it out manually.
Submit the Form Before the Deadline
Ensure you submit Form 4868 by the original filing deadline (April 15, 2024). You can file this form electronically, through a tax professional, or by mailing it to the IRS.
Pay Any Estimated Taxes Owed
If you owe taxes, make an estimated payment with your extension request to minimize interest and penalties. You can pay online, by phone, or by mailing a check with your Form 4868.
Receive Confirmation
If you file electronically, you’ll receive an electronic confirmation once your extension is approved. If you mail your form, it’s a good idea to send it via certified mail to ensure it’s received.
Mark the New Deadline
With an approved extension, your new deadline to file your tax return is October 15, 2024. Use this additional time to gather necessary documents, rectify any discrepancies, and consult with a tax professional if needed.
What Happens If You Don't File Taxes
Not filing your taxes can lead to significant consequences, especially if you owe money to the IRS. Understanding what can happen if you don't file your taxes is important to avoid potential legal and financial repercussions.
Penalties and Interest
Failure-to-File Penalty: If you owe taxes and don’t file by the deadline (April 15, 2024), the IRS imposes a failure-to-file penalty. This penalty is typically 5% of the unpaid taxes for each month or part of a month that a tax return is late.
Failure-to-Pay Penalty: In addition to the failure-to-file penalty, you’ll also face a failure-to-pay penalty if you don’t pay your taxes by the due date. This is generally 0.5% of your unpaid taxes per month.
Interest: Interest accrues on your unpaid taxes from the due date of the return until the date of payment.
Increased IRS Scrutiny
Not filing taxes can flag your account for increased IRS scrutiny. This could lead to an audit or more aggressive collection actions by the IRS.
Compounded Financial Obligations
Over time, penalties and interest can substantially increase the amount you owe, making it more challenging to clear your tax debt.
Loss of Refund
If you're entitled to a refund, failing to file a return may result in losing your right to it. There's a three-year window for claiming a refund; if you don't file within this period, the refund is forfeited.
Legal Consequences
In extreme cases, particularly where large sums are owed, not filing taxes can lead to criminal charges, including tax evasion, which can result in fines and imprisonment.
Impact on Loans and Credits
Failing to file taxes can affect your credit score and may impact your ability to receive loans, including mortgages or business loans.
Options for Late Filers
If you haven’t filed past tax returns, it’s important to do so as soon as possible. The IRS offers options for taxpayers to file late returns and make payment arrangements for outstanding taxes.
Staying informed about the tax filing start date and deadline for 2024 is crucial for a smooth tax season. With the right preparation and tools like Everlance, you can ensure accuracy in your tax returns and potentially maximize your deductions. Don’t wait until the last minute - start organizing your financial records now for a hassle-free tax filing experience.
Brad Thibeau is the Head of Partnerships at Everlance, and has held that role since 2021, with a focus on helping self employed people save time and money on their taxes.
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