Tax Planning 2024: When, How and Where To Start Filing Your Taxes

Tax Planning 2024

If you file your taxes annually and your tax year concludes on December 31, mark April 15 on your calendar – that’s when your federal individual income tax return is typically due. Now, if you follow a fiscal year ending on a month other than December, file by the 15th day of the fourth month after your fiscal year closes. Note, if the due date lands on a weekend or holiday, shift it to the next business day.

Tax Updates 2024

For the 2023 tax return, most filers should aim for April 15, 2024 (April 17, 2024, if you reside in Maine or Massachusetts). Your return is considered on time if properly addressed, postmarked, and in the mail by the due date. Electronic filers, ensure your return is transmitted by the due date in your time zone. Expect an electronic acknowledgment from the IRS once they accept your e-filed return.

Read on to explore more about when, how, and where to start filing your taxes and Plan your tax strategy wisely for 2024. 

When Can I File My 2023 Tax Return?

You can start filing your 2023 tax return on January 29, 2024, when the IRS begins accepting and processing returns. You can use tax software to enter information earlier or submit paperwork to a tax professional before this date.

When should I file?

If your tax year ends on December 31, file your federal individual income tax return by April 15, 2024. If you use a fiscal year, file on or before the 15th day of the fourth month after the close of your fiscal year. If the due date falls on a weekend or holiday, it moves to the next business day.

If you served in the military or faced a disaster, you may have additional time to file. For those living abroad, an automatic 2-month extension is possible. Interest may apply to unpaid taxes after the original due date.

When is the deadline to file a 2023 tax return with the IRS?

The deadline to file federal tax returns for 2023 is April 15, 2024. If you live in Maine or Massachusetts, the deadline is April 17, 2024. Extensions are available in certain situations, such as disasters or military service. If you get an extension, you have until October to complete your paperwork, but you still need to pay any owed amount on time to avoid penalties.

In some states, the tax return deadline differs. Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming don’t collect income taxes. Among the 41 states that do, most follow the federal deadline of April 15. Some exceptions include Delaware, Iowa, Louisiana, and Virginia.

For those in states with federal filing extensions, the state returns must still be filed by April 15, 2024. While you can request an automatic extension, any outstanding payments must be made by the original deadline.

How can I get an extension?

If you can’t file by the due date, request an automatic 6-month extension using Form 4868. File the extension request by the due date, but remember that it doesn’t extend the time to pay. Interest and late-payment penalties may apply if taxes aren’t paid by the original due date. For more information on extensions, refer to IRS guidelines.

When can I expect my Tax Return?

  1. Refund Timeline for E-filers:
    • If you file electronically and opt for direct deposit with no issues, expect your refund within 21 days.
  2. Special Refund Dates for Certain Credits:
    • For those claiming the earned income tax credit or additional child tax credit, the IRS will start issuing refunds by mid-February.
    • If you use direct deposit and encounter no problems, you should receive these refunds by February 27, 2024.

How to File Your Tax Return: A Step-by-Step Process

When e-filing your tax return, it’s electronically transmitted, so no worries about sending it to the right place. For paper returns, check the form instructions for the correct mailing address.

If you owe money, you can pay electronically or enclose a check/money order with your paper return or Form 1040-V (Payment Voucher for e-filers).

  • Make the payment to the “United States Treasury.”
  • On the payment, include your name, address, taxpayer ID, phone number, tax year, and form type (e.g., 2023 Form 1040).
  • Don’t staple the payment or Form 1040-V to your return.
  • Avoid mailing cash.
  • If using tax software, follow the instructions for making payments.

For info on credit/debit cards, digital wallets, or other payment options, check the Payments page. If you can’t pay, the IRS may help with a payment arrangement.

1. Consider Electronic Filing:

  • E-filing is faster and ensures quicker refunds, often within 3 weeks.
  • Tax professionals or Tax Planning software can help, but there might be fees. Check for Free File options.

2. Paper Filing:

  • Mailing paper forms takes longer, about six weeks for processing.
  • Attach all necessary documents in order, like W-2s, schedules, and forms.

3. Signing Your Return:

  • Joint returns need both spouses’ signatures.
  • If a spouse can’t sign due to a medical condition, follow specific steps.
  • If signing for a minor child, use their name followed by “by,” then your signature.
  • Ensure proper attachment of relevant forms and schedules.
  • If corrections are needed, include Form W-2c.
  • If filing for someone else, use a valid power of attorney and attach Form 2848.

By following these steps, you can navigate the tax filing process smoothly and efficiently.

United States TAX INCOME BRACKETS for 2024 

The IRS has adjusted the federal tax rates for 2023, which is applicable when filing your return in 2024. These brackets are crucial for calculating taxes on your employment and investment income. Knowing your filing status and where your income fits into these brackets is vital for effective tax planning. 

Tax RateSingleHead of HouseholdMarried Filing Jointly or Qualifying WidowMarried Filing Separately
10%$0 to $11,000$0 to $15,700$0 to $22,000$0 to $11,000
12%$11,001 to $44,725$15,701 to $59,850$22,001 to $89,450$11,601 to $47,150
22%$47,151 to $100,525$63,101 to $100,500$94,301 to $201,050$47,151 to $100,525
24%$100,526 to $191,950$100,501 to $191,950$201,051 to $383,900$100,525 to $191,950
32%$191,951 to $243,725$191,951 to $243,700$383,901 to $487,450$191,951 to $243,725
35%$243,726 to $609,350$243,701 to $609,350$487,451 to $731,200$243,726 to $365,600
37%$609,351 or more$609,351 or more$731,201 or more$365,601 or more

Top 7 Important Tips for Tax Panning 2024:

  1. File your current year’s tax return promptly to avoid penalties and interest on unpaid amounts.
  2. If you have a high-deductible health plan, contribute to or open a Health Savings Account (HSA). 
  3. Singles or those filing separately can contribute up to $3,850 ($4,150 for 2024), and married couples filing jointly can contribute up to $7,750 ($8,300 for 2024) with a $1,000 catch-up for those 55 or older. Contributions can be made until the tax return’s due date.
  4. Contribute to an IRA (traditional or Roth) with a maximum of $6,500 ($7,500 if 50 or older) per year. Contributions are allowed until the tax return’s due date.
  5. Consider a Qualified Longevity Annuity Contract (QLAC) if you’re over 85 to secure retirement income.
  6. Obtain a Social Security number for US children promptly to ease processes like opening a bank account.
  7. If you have unrealized losses in your portfolio, sell “loss” stocks to offset gains, up to $3,000 per year. Be cautious of the wash sale rule, which disregards losses if you repurchase the same stock within 30 days..
  8. Prepare for next year by listing expected documents like W-2s, foreign wage statements, and Form 1099s. 
  9. Collect information for reporting asset sales. Plan for new 1099 forms, especially for digital assets. 
  10. If you live overseas, handle your local foreign return before addressing the US return. Start planning early in the new year.

Bottom Line 

In gearing up for a successful tax year in 2024, your financial peace of mind starts with the right guidance. At BSE Accounting, our dedicated CPA and tax planning financial advisors are here to simplify your tax planning and filing process. We understand that each financial situation is unique, and we tailor our expertise to suit your needs. From careful planning to seamless return filing, we’ve got you covered every step of the way.

So, why stress over taxes when you can have personalized support? Let BSE Accounting be your trusted partner in navigating the complexities of tax planning. Our team is ready to assist you with expert advice and strategic insights. Take the first step towards a hassle-free tax season – book your free consultation call now. Plan early, and let’s make 2024 your best financial year yet.

Tax Planning Frequently Asked Questions (2024): 

Ques: What is tax planning for small businesses?

Ans: Tax planning for small businesses involves the analysis of a financial situation or plan to ensure that all elements work together to minimize tax payments. It aims to create a tax-efficient plan by considering factors such as the timing of income, purchases, and expenditures.

Ques: What are the factors involved in tax planning?

Ans: Tax planning includes evaluating the timing of income, the size of income, the timing of purchases, planning for expenditures, and selecting investments and retirement plans that align with the individual’s tax situation.

Ques: How can retirement saving strategies contribute to tax planning?

Ans: Contributing to tax-planning retirement plans, such as a traditional IRA or a 401(k), is a popular tax-planning strategy. These contributions can reduce gross income, potentially resulting in lower tax liability. For example, contributing to a traditional IRA allows for tax-deferred growth until withdrawal.

Ques: What are the contribution limits for a traditional IRA and a 401(k) in 2024?

Ans: In 2024, the contribution limit for a traditional IRA is $7,000, with an additional catch-up contribution of $1,000 for individuals aged 50 and older. The 401(k) contribution limit is $23,000, with an additional $7,500 catch-up contribution for those aged 50 and over.

Ques: How does tax gain-loss harvesting contribute to tax planning?

Ans: Tax gain-loss harvesting is a form of tax planning related to investments. It involves using portfolio losses to offset overall capital gains. Short and long-term capital losses must first be used to offset gains of the same type, providing a way to manage tax liabilities on investment returns.

Ques: What are the long-term capital gain tax limits for 2023 and 2024?

Ans: In 2023, long-term capital gain tax rates range from 0% to 20%, depending on income. In 2024, the limits are increasing, ranging from 0% to 20% as well.

Ques: How can individuals with capital losses offset their tax liability?

Ans: Individuals with capital losses can offset their tax liability by using the losses to offset capital gains. If capital losses exceed gains, there’s a limit of $3,000 ($1,500 for married filing separately) that can be claimed to lower income. Any remaining losses can be carried over to offset future capital gains.

Ques: What are some basic tax planning strategies?

Ans: Basic tax planning strategies include reducing overall income through contributions to retirement plans, making tax-deductible expenses, and taking advantage of tax credits.

Ques: How can high-income earners reduce taxes?

Ans: High-income earners can reduce taxes through various strategies such as contributing to retirement accounts, investing in stocks with qualified dividends, utilizing health savings accounts (HSAs), buying municipal bonds, and considering favorable tax treatments when choosing a place of residence.

Ques: Can one contribute to a 401(k), a traditional IRA, and a Roth IRA simultaneously?

Ans: Yes, it is possible to contribute to a 401(k), a traditional IRA, and a Roth IRA simultaneously. However, individuals must ensure they adhere to the legally allowed contribution limits for each account, and the overall maximum allowed for an IRA should not be exceeded.

Ques: What is the bottom line of tax planning?

Ans: The bottom line of tax planning is to use legal strategies that lower the amount of taxes an individual needs to pay. This includes utilizing retirement plans, holding investments for more than a year for favorable tax treatment, and offsetting capital gains with capital losses.

Ques: Can individuals use the same software as businesses for tax planning?

Ans: Yes, individuals can use similar tax planning software as businesses. Many software options cater to both individual and business tax needs, providing features for income tracking, deductions, and filing.

Ques: How can a tax planning attorney help with complex tax situations?

Ans: A tax planning attorney can provide expertise in navigating complex tax laws and regulations. They can offer personalized advice, help optimize financial strategies, and represent individuals in dealings with tax authorities if needed.

Ques: How can I find reputable tax planning services near me?

Ans: To find reputable tax planning services near me, consider asking for recommendations from friends or colleagues, checking online reviews, and researching the credentials of potential service providers. Local business directories and professional organizations can also be valuable resources.

Ques: Do tax planning services include year-round support?

Ans: It depends on the service provider. Some tax planning services offer year-round support, allowing individuals to seek advice and guidance beyond the tax-filing season. It’s essential to inquire about the level of ongoing support before choosing a service.

Ques: What should individuals look for in a tax planning financial advisor?

Ans: When selecting a tax planning financial advisor, individuals should consider factors such as experience, qualifications, and expertise in tax laws. Look for advisors who stay updated on tax regulations, communicate effectively, and provide personalized advice tailored to your financial situation.

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