IRS Readies for 2024 Tax Season Amid Talks of Legislative Changes
With the IRS yet to announce the beginning of the 2024 filing season, taxpayers across the United States are preparing for Tax Day on April 15th.
Jamie Bailey
- 2024-01-07
- Updated 03:21 AM ET
(NewsNibs) - The Internal Revenue Service (IRS) has not specified a start date for the 2024 filing season, leaving taxpayers anticipating the official kickoff. Individuals and businesses are advised to start preparing early by organizing receipts, particularly for potential deductions, and keeping an eye out for important tax forms such as W-2s. Tax Day remains set for April 15, providing a deadline for paying any taxes due or filing for an extension. The IRS provides installment plans to ease the burden of lump sum payments for those who need it.
Adjustments in Tax Brackets and Deductions
In response to high inflation, income-tax brackets saw a 7% increase in fall 2022. Moving into tax year 2024, an additional increase of 5.4% in tax brackets has been announced by the IRS. These brackets will be applied for tax returns filed in early 2025. The standard deduction has also seen an increase, moving up to $13,850 for individuals and $27,700 for married couples filing jointly for the tax year 2023. For the tax year 2024, these amounts will further increase to $14,600 for individuals and $29,200 for married couples filing jointly, with about 90% of taxpayers opting for the standard deduction over itemizing.
Retirement Contributions and Credits
Taxpayers are reminded that the maximum contribution for 401(k) plans in 2023 is $23,000, an increment from the previous limit of $22,500. April 15 also serves as the deadline for IRA contributions, with caps set at $6,500 for individuals under 50 and $7,500 for those aged 50 and above. The child tax credit remains stable at a maximum of $2,000 per qualifying child under 17 for the 2023 tax filing, with up to $1,600 being refundable. In the political realm, Congressional Democrats, after having raised the child tax credit temporarily to as much as $3,600 in 2021, have since seen it revert to $2,000. Currently, legislators are in discussions about potential changes to various aspects of the tax code, including business deduction rules for Research & Development (R&D) costs and the child tax credit, aiming to make adjustments in time for this tax season.
Potential Impact of a Government Shutdown
While taxpayers and the IRS prepare for the season ahead, there looms the possibility of a federal government shutdown which could affect the tax filing timeline. However, recent funding measures have ensured that the IRS will continue operations until February 2, mitigating the immediate risk to the tax filing process. In addition, the IRS has made necessary adjustments to reflect the country's economic situation, with tax brackets and deductions adapting to maintain parity with inflation trends.
As the nation approaches the tax filing deadline, individuals and businesses are urged to stay informed about these changes and begin their preparations in earnest. With the possibility of new legislation on the horizon, taxpayers are also encouraged to pay attention to congressional developments that may influence their 2023 tax filings and planning for the year ahead.
