Tax season is just around the corner. Here’s a look at what you need to know as you sort out your tax forms, organize your receipts, and get ready to file.
When does tax season officially open?
The IRS has announced that the tax filing season will open on Monday, Jan. 29, 2024.
When is Tax Day?
Tax Day is Apr. 15, 2024, for most taxpayers. Taxpayers in Maine or Massachusetts have until Apr. 17, 2024, due to the Patriot's Day and Emancipation Day holidays. Taxpayers living in a federally declared disaster area may also have additional time to file.
Will there be any delays?
We don't know just yet. Senate Finance Committee Chair Ron Wyden (D-Ore.) and House Ways and Means Committee Chair Jason Smith (R-Mo.) recently announced a bipartisan tax proposal that would restore bonus depreciation, put an early end to the Employee Retention Credit (ERC), and expand the Child Tax Credit (CTC). Some of the proposed changes would apply to 2023 and affect the tax filing season, resulting in the IRS and software companies needing to update forms and programs. If the changes happen too late in the season, taxpayers may need to file amended returns. Wyden indicated that he and Smith want to advance the new law immediately so that taxpayers can take advantage of the breaks as they file tax returns this year, vowing, "I'm going to pull out all the stops to get that done."
You can read my previous coverage of the bill and the subsequent move through committee here and here.
When should I expect to receive my Forms W-2, 1099, and other tax forms?
Forms W-2 are due on Jan. 31, 2024, as are Forms 1099-NEC. Your tax form is on time if it is properly addressed and mailed on or before the due date. If the normal due date falls on a Saturday, Sunday, or legal holiday (which is not the case in 2024), issuers have until the next business day.
You can find due dates for some other popular tax forms here.
What is the standard deduction for 2023?
The standard deduction for a married couple filing a joint tax return was $27,700 for 2023. The standard deduction was $13,850 for singles and couples filing separately, while heads of household can claim a standard deduction of $20,800 in 2023.
The additional standard deduction for taxpayers 65 or older was $1,500 in 2023 (for those 65 or older and unmarried, the additional standard deduction clicks up to $1,850).
You can find more adjustments and the 2023 tax rates here.
Have there been any significant tax changes that will affect my 2023 taxes?
There weren't a lot of significant tax changes in 2023—most of the tweaks are related to cost of living adjustments. But there were a few changes, including:
- The credit for new qualified plug-in electric drive motor vehicles is now known as the clean vehicle credit—worth up to $7,500. A credit of up to $4,000 is available for previously owned clean vehicles. For details and more information, see my previous article.
- Older taxpayers—at least age 70 1/2—could make a qualifying charitable distribution (QCD) in 2023. A QCD is tax-free, doesn't count towards your charitable limits, and you won't even have to itemize to see the benefit. With a QCD, you can roll up to $100,000 directly from your IRA to a qualified charity in 2023. If you're at least 73, the QCD can also satisfy your required minimum distributions (RMDs) for the year. And, beginning in 2023, you can elect to make a one-time distribution of up to $50,000 from an IRA to charities through a charitable remainder annuity trust, a charitable remainder unitrust, or a charitable gift annuity.
If I didn't make any money, do I have to file a tax return?
Whether you need to file a tax return depends on your filing status, age, and gross income. You can figure that out using this chart:
When referring to the chart, keep in mind that gross income means all income you receive in the form of money, goods, property, and services that isn't exempt from tax. That includes income from sources outside the U.S. and from the sale of your main home (even if you can exclude part or all of it). When figuring gross income, don't include Social Security benefits unless you are married filing separately and lived with your spouse at any time in 2023, or if one-half of your Social Security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Don't include losses from your business or the sale of assets.
Even if you don't have to file a return, you may want to file to get a refund of any federal income tax withheld. You should also file if you are eligible for any of the following credits:
- Earned Income Tax Credit (EITC)
- Additional Child Tax Credit (ACTC)
- American Opportunity Credit
- Credit for Federal Tax on Fuels
- Premium Tax Credit
- Credits for Sick and Family Leave
Are my Social Security benefits taxable?
If your only source of income is your Social Security check, your benefits are generally not taxable. You may not even need to file a return (but see above).
If you received income from other sources, your benefits would not be taxed unless your combined income exceeds the base amount for your filing status.
Here's the rough formula: add one-half of the total Social Security benefits you received last year to your other income, including any tax-exempt interest and other exclusions from income. Compare that total to the base amount for your filing status. If the total is more than the base amount for your filing status, some of your benefits may be taxable.
The base amounts are $32,000 for married taxpayers filing jointly, $25,000 for taxpayers filing as single, head of household, qualifying widow/widower with a dependent child, or married filing separately who did not live with their spouses at any time during the year; and $0 for married persons filing separately who lived together during the year.
Do I need to report crypto transactions?
Every taxpayer who files a tax return in 2023 will need to answer this question:
Digital assets are considered to be any digital representations of value recorded on a cryptographically secured distributed ledger or any similar technology. That includes non-fungible tokens (NFTs) and virtual currencies, such as cryptocurrencies and stablecoins. The IRS is taking the "if it walks like a duck" approach by clarifying, "If a particular asset has the characteristics of a digital asset, it will be treated as a digital asset for federal income tax purposes."
If, in 2023, you disposed of any digital asset through a sale, trade, exchange, payment, or other transfer, you'll report the sale on Form 8949 and Schedule D. If you received any digital asset as compensation for services or disposed of any digital asset that you held for sale to customers in a trade or business, you must report the income as you would report other income of the same type (for example, wages).
For more on digital assets, see this previous article.
Will I receive Form 1099-K this year?
Maybe. Last year, the IRS announced that payment apps and online marketplaces would only be required to file Form 1099-K for accounts that receive over $20,000 in payments from over 200 transactions for goods or services. That should mean you will only receive Form 1099-K if you hit the existing transaction threshold (an exception exists for taxpayers subject to backup withholding). However, companies could still send out the form if you hit the lower threshold of $600. No matter the amount, your reporting requirement remains the same: if you receive payments for selling goods or services or renting property, you must report your income.
When can I expect my tax refund?
The IRS anticipates issuing more than nine out of 10 refunds in less than 21 days. However, the law requires the IRS to hold refunds tied to the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until mid-February. Remember that the rule applies to the entire refund—even the portion not associated with the EITC and ACTC. That, together with bank processing times and bank holidays, means that if you’re an early EITC/ACTC filer, you should begin to see tax refunds on Feb. 27, 2024, if you chose direct deposit and there are no other issues with your tax return.
Where can I get more help?
You can get help from the IRS online or by phone. You can also check with your tax professional. And, of course, check back with our Forbes tax team for up-to-date coverage throughout tax season.
As a tax expert with extensive knowledge in the field, I've been actively following the latest updates and changes in tax regulations. My experience allows me to provide valuable insights into the upcoming tax season, addressing various aspects of tax filing, potential changes, and essential information for taxpayers.
Let's delve into the concepts discussed in the article:
Tax Season Dates:
- Tax filing season opens on Monday, Jan. 29, 2024.
- Tax Day is Apr. 15, 2024, except for taxpayers in Maine or Massachusetts, who have until Apr. 17, 2024, due to holidays.
Potential Delays and Proposed Tax Changes:
- There is uncertainty regarding delays, as bipartisan tax proposals by Senate Finance Committee Chair Ron Wyden and House Ways and Means Committee Chair Jason Smith may impact the tax filing season.
- Proposed changes include restoring bonus depreciation, ending the Employee Retention Credit (ERC) early, and expanding the Child Tax Credit (CTC).
Forms and Documentation:
- Forms W-2 and 1099-NEC are due on Jan. 31, 2024.
- Standard deductions for 2023 are $27,700 for married couples filing jointly, $13,850 for singles and couples filing separately, and $20,800 for heads of household.
Significant Tax Changes in 2023:
- Notable changes include the clean vehicle credit, new options for charitable distributions (QCD), and the ability to make a one-time distribution to charities from an IRA.
- The decision to file depends on factors such as filing status, age, and gross income. The article provides a chart for users to determine whether they need to file a tax return.
Taxation of Social Security Benefits:
- Social Security benefits are generally not taxable if it's the only source of income. However, the article outlines conditions under which benefits may become taxable.
Reporting Crypto Transactions:
- Taxpayers need to report digital asset transactions on Form 8949 and Schedule D if they disposed of any digital asset in 2023.
Form 1099-K and Income Reporting:
- The requirement for receiving Form 1099-K depends on the amount received through payment apps and online marketplaces.
Tax Refund Timeline:
- The IRS aims to issue over 90% of refunds in less than 21 days. However, refunds tied to the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) may be held until mid-February.
- Taxpayers can seek assistance from the IRS online or by phone, consult with tax professionals, and stay updated with reliable sources, such as Forbes, for timely coverage.
This comprehensive overview equips taxpayers with essential information to navigate the upcoming tax season effectively. If you have any specific questions or need further clarification, feel free to ask.