News

IR-2024-297, Nov. 22, 2024

WASHINGTON — As the nation’s tax season approaches, the Internal Revenue Service is reminding people of simple steps they can take now to prepare to file their 2024 federal tax returns.

This reminder is part of the IRS’s “Get Ready” campaign to help everyone prepare for the upcoming filing season in early 2025.

“Our focus at the IRS continues to be on making tax filing easier and more accessible for everyone,” said IRS Commissioner Danny Werfel. “We’ve added more digital tools to help taxpayers. But as tax season quickly approaches, the IRS reminds taxpayers there are important steps they can take now to get ready for 2025. From reviewing withholding to signing up for an IRS Online Account, there are multiple ways for people to help make the 2025 filing season easier.”

As the IRS continues its historic transformation work, the agency continues introducing new online tools as well as expanding and updating other digital tools. These are designed to help taxpayers and make tax filing easier.

Access IRS Online Account for helpful information

Taxpayers can create or access their IRS Online Account, where they can find all their tax related information for the 2025 filing season. New users will need to have a photo ID ready to verify their identity. Through their IRS Online Account, taxpayers can:

• View key details from their most recent tax return, such as adjusted gross income.
• Request an Identity Protection PIN.
• Get account transcripts to include wage and income records.
• Sign tax forms like powers of attorney or tax information authorizations.
• View and edit language preferences and alternative media (such as braille, large print, etc.).
• Receive and view over 200 IRS electronic notices.
• View, make and cancel payments.
• Set up or change payment plans and check their balance.

Gather and organize tax documents

Having well-organized tax records can make filing a complete and accurate return easier and help avoid errors that can delay refunds. This may also help identify deductions or credits that may have been overlooked.

Most income is taxable, including unemployment compensation, refund interest and income from the gig economy and digital assets. Taxpayers should watch for and gather essential forms, such as Forms W-2, Wage and Tax Statement, and other income documents.

It’s also important to notify the IRS of any address changes and the Social Security Administration of any legal name changes.

Check withholding before the end of 2024

The IRS Tax Withholding Estimator on IRS.gov can help taxpayers make sure the correct amount of tax is withheld from their paychecks. This tool is especially useful for individuals who owed taxes or received large refunds last year, or those who have experienced life changes such as marriage, going through a divorce, or the welcoming of a child. Taxpayers who need to adjust their withholding can update their information with their employer using Form W-4, Employee’s Withholding Allowance Certificate.

Time is running out to make changes for 2024, as only a few pay periods remain in the year. Taxpayers need to act quickly to make any adjustments.

Get refunds faster with direct deposit

The fastest and most secure way to receive a tax refund is through direct deposit. Taxpayers can direct their refund to a bank account, banking app or reloadable debit card by providing their routing and account numbers. If the routing and account number cannot be located, taxpayers should contact their bank, financial institution or app provider.

According to Treasury’s Bureau of the Fiscal Service, paper refund checks are 16 times more likely to be lost, misdirected, stolen or uncashed compared to those paid using direct deposit.

Individuals without a bank account can explore options for opening one through FDIC-insured banks or a credit union using the National Credit Union Locator tool. Veterans can use the Veterans Benefits Banking Program to find participating financial institutions.

Volunteer to help others with their taxes

The IRS and its community partners are seeking volunteers from around the country to join the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. These programs offer free tax preparation services to eligible taxpayers. Interested individuals can learn more and sign up by visiting IRS.gov.

Helpful IRS resources and online tools

IRS.gov is a valuable resource for taxpayers, offering a variety of online tools like the Individual Online Account available 24/7. These tools help individuals file and pay taxes, track refunds, access account information and get answers to tax questions. Taxpayers are encouraged to bookmark these resources for easy access.

Choosing a tax professional

Tax professionals play an essential role in the U.S. tax system. Certified public accountants, Enrolled Agents, attorneys and others without formal credentials are just a few of the professionals who help taxpayers file their returns accurately. It is important to choose a professional who is skilled and trustworthy.

Most tax return professionals provide great service but picking the wrong one can hurt taxpayers financially. The IRS offers tips for choosing a tax preparer.

People can use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to find qualified professionals.

R-2023-235, Dec. 11, 2023

WASHINGTON — The Internal Revenue Service today urged taxpayers to take important actions now to help them file their 2023 federal income tax return next year.

This is the second in a series of reminders to help taxpayers get ready for the upcoming filing season. The Get ready page on IRS.gov outlines steps taxpayers can take now to make filing easier in 2024.

Here’s what’s new and what to consider before filing next year.

IRS Online Account enhancements

Taxpayers and Individual Taxpayer Identification Number (ITIN) holders can now access their Online Account and view, approve and electronically sign power of attorney and tax information authorizations from their tax professional.

With an Online Account, individuals can also:

• View their tax owed and payment history and schedule payments.
• Request tax transcripts.

• View or apply for payment plans.
• See digital copies of some IRS notices.
• View key data from their most recently filed tax return, including adjusted gross income.
• Validate bank accounts and save multiple accounts, eliminating the need to re-enter bank account information every time they make a payment.

Avoid refund delays and understand refund timing

Many different factors can affect the timing of a refund after the IRS receives a tax return. Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a 2023 federal tax refund by a certain date, especially when making major purchases or paying bills. Some returns may require additional review and may take longer to process if IRS systems detect a possible error, the return is missing information or there is suspected identity theft or fraud.

Also, the IRS cannot issue refunds for people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law requires the IRS to hold the entire refund – not just the portion associated with the EITC or ACTC. The IRS expects most EITC and ACTC related refunds to be available in taxpayer bank accounts or on debit cards by Feb. 27, 2024, if the taxpayer chose direct deposit and there are no other issues with the tax return.

Last quarterly payment for 2023 is due on Jan. 16, 2024

Taxpayers may need to consider estimated or additional tax payments due to non-wage income from unemployment, self-employment, annuity income or even digital assets. The Tax Withholding Estimator on IRS.gov can help wage earners determine if there’s a need to consider an additional tax payment to avoid an unexpected tax bill when they file.

Gather 2023 tax documents

Taxpayers should develop a record keeping system − electronic or paper − that keeps important information in one place. This includes year-end income documents like Forms W-2 from employers, Forms 1099 from banks or other payers, Forms 1099-K from third party payment networks, Forms 1099-NEC for nonemployee compensation, Forms 1099-MISC for miscellaneous income or Forms 1099-INT for interest paid, as well as records documenting all digital asset transactions.

When they have all their documentation, taxpayers are in the best position to file an accurate return and avoid processing or refund delays.

1099-K reporting threshold delayed

Following feedback from taxpayers, tax professionals and payment processors and to reduce taxpayer confusion, the IRS delayed the new $600 Form 1099-K reporting threshold for third party settlement organizations for calendar year 2023.

As the IRS continues to work to implement the new law, the agency will treat 2023 as an additional transition year. This will reduce the potential confusion caused by the distribution of Forms 1099-K sent to many taxpayers who wouldn’t expect one and may not have a tax obligation. As a result, reporting will not be required unless the taxpayer receives over $20,000 and has more than 200 transactions in 2023.

Given the complexity of the new provision and the large number of individual taxpayers affected, the IRS is planning for a threshold of $5,000 for tax year 2024 as part of a phase-in to implement the $600 reporting threshold enacted under the American Rescue Plan (ARP).

It is important for taxpayers to understand why they received a Form 1099-K, then use the form and their other records to help figure and report their correct income on their tax return. It is also important for taxpayers to know what to do if they received a Form 1099-K but shouldn’t have.

There’s no change to the taxability of income. All income, including from part-time work, side jobs or the sale of goods is still taxable. Taxpayers must report all income on their tax return unless it’s excluded by law, whether they receive a Form 1099-K, a Form 1099-NEC, Form 1099-MISC or any other information return.

Understand energy related credits

Taxpayers who bought a vehicle in 2023 should review the changes under the Inflation Reduction Act of 2022 to see if they qualify for the credits for new electric vehicles purchased in 2022 or before or the new clean vehicles purchased in 2023 or after. To claim either credit, taxpayers will need to provide the vehicle’s VIN and file Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit, with their tax return.

If taxpayers made energy improvements to their home, tax credits are available for a portion of qualifying expenses. The Inflation Reduction Act of 2022 expanded the credit amounts and types of qualifying expenses. To claim the credit, taxpayers need to file Form 5695, Residential Energy Credits, Part II, with their tax return.

Speed tax refunds with direct deposit

Filing electronically and choosing direct deposit is the fastest way for taxpayers to get their tax refund. Direct deposit gives individuals access to their refund faster than a paper check.

Those without a bank account can learn how to open an account at an FDIC insured bank or through the national Credit Union Locator tool. Veterans should see the Veterans Benefits Banking Program for access to financial services at participating banks.

Prepaid debit cards or mobile apps may allow direct deposit of tax refunds. The prepaid debit cards or mobile apps must have routing and account numbers associated with them to enter on the tax return. Check with the mobile app provider or financial institution to confirm which numbers to use.

Welcome to Delgado and Associates, where we specialize in demystifying the intricate world of taxes to ensure you get the most out of your return. In this blog post, we’ll explore key tax credits that can significantly impact your refund, from the Earned Income Credit (EIC) and Child Tax Credit (CTC) to the Student Tax Credit and beyond. Join us as we delve into essential terms like Adjusted Gross Income (AGI), self-employment income, and the advantages of early e-filing.

Earned Income Credit (EIC):
The Earned Income Credit (EIC) is a powerful tool for working individuals and families with low to moderate incomes. Delgado and Associates specializes in helping clients navigate the EIC terrain, ensuring they claim the maximum credit available to them.

Child Tax Credit (CTC):
Parents, rejoice! The Child Tax Credit (CTC) can make a significant impact on your tax liability. Learn how Delgado and Associates can assist you in understanding the eligibility criteria, maximizing your credit, and optimizing your tax return.

Student Tax Credit:
If you’re pursuing higher education, you may be eligible for valuable tax credits. Delgado and Associates is here to guide students and their families through the intricacies of claiming Student Tax Credits, providing insights that can lead to substantial savings.

Self-Employment Income:
Self-employment offers flexibility, but it also brings unique tax challenges. Delgado and Associates specializes in helping self-employed individuals navigate the tax landscape, identifying deductions and credits to minimize tax liability and maximize returns.

Early E-Filing:
Beat the tax season rush! Delgado and Associates encourages early e-filing to expedite the processing of your return and receive your refund sooner. Learn about the advantages of filing early and how our digital solutions can simplify the process.

Dependents:
Claiming dependents can result in significant tax benefits. Delgado and Associates guides you through the rules and regulations surrounding dependents, ensuring you maximize your deductions and credits.

Refund and Tax Refund:
At Delgado and Associates, we understand the excitement of receiving a tax refund. Explore strategies for increasing your refund, and discover how our team can help you make the most of this financial windfall.

Adjusted Gross Income (AGI):
Understanding your Adjusted Gross Income (AGI) is key to optimizing your tax situation. Delgado and Associates provides expertise in calculating AGI and implementing strategies to reduce it, potentially increasing your eligibility for various tax credits.

AOTC (American Opportunity Tax Credit):
For students or parents supporting their education, the American Opportunity Tax Credit (AOTC) can be a game-changer. Delgado and Associates guides you through the eligibility criteria and helps you claim this credit effectively.

Conclusion:
As you embark on your tax-filing journey, let Delgado and Associates be your trusted partner in maximizing your refund. From navigating tax credits to understanding essential terms like AGI and early e-filing benefits, we’re here to ensure your financial success. Trust us to handle the complexities, so you can reap the rewards. Delgado and Associates – making tax season a breeze!

IR-2023-222, Nov. 22, 2023

WASHINGTON —The Internal Revenue Service reminds low- and moderate-income taxpayers that they can save for retirement now and possibly earn a special tax credit in 2024 and years ahead.

The Retirement Savings Contributions Credit, also known as the Saver’s Credit, helps offset part of the first $2,000 workers voluntarily contribute to Individual Retirement Arrangements (IRAs), 401(k) plans and similar workplace retirement programs. The credit also helps any eligible person with a disability who is the designated beneficiary of an Achieving a Better Life Experience (ABLE) account and makes a contribution to that account. For more information about ABLE accounts, see Publication 907, Tax Highlights for Persons With Disabilities.

The maximum Saver’s Credit is $1,000 ($2,000 for married couples). The credit can increase a taxpayer’s refund or reduce the tax owed but is affected by other deductions and credits. Distributions from a retirement plan or ABLE account reduce the contribution amount used to figure the credit.

Contribution deadlines

Individuals with IRAs have until April 15, 2024 – the due date for filing their 2023 return – to set up a new IRA or add money to an existing IRA for 2023. Both Roth and traditional IRAs qualify.

Individuals with workplace retirement plans still have time to make qualifying retirement contributions and get the Saver’s Credit on their 2023 tax return. Elective deferrals (contributions) to workplace retirement plans must be made by December 31 to a:

• 401(k) plan.
• 403(b) plan for employees of public schools and certain tax-exempt organizations.
• Governmental 457 plan for state or local government employees.
• Thrift Savings Plan (TSP) for federal employees.

See the instructions to Form 8880, Credit for Qualified Retirement Savings Contributions, for a list of qualifying workplace retirement plans and additional details.

Eligibility

To be eligible, taxpayers must be 18 years of age and older, not claimed as a dependent and not a full-time student. The Saver’s Credit has income limits based on a taxpayer’s adjusted gross income and their marital or filing status.

2023 income limits are:

• Married couples filing jointly with adjusted gross incomes up to $73,000.
• Heads of household with adjusted gross incomes up to $54,750.
• Married individuals filing separately and singles with adjusted gross incomes up to $36,500.

Taxpayers can use the Interactive Tax Assistant tool for the Saver’s Credit to determine their eligibility.

Visit the Saver’s Credit page on IRS.gov to learn about rules, contribution rates and credit limits.

IR-2023-233, Dec. 8, 2023

WASHINGTON— The Internal Revenue Service’s Independent Office of Appeals today released its Focus GuidePDF for fiscal year 2024.

The guide highlights where Appeals will be improving taxpayer service in its mission to resolve tax disputes in a fair and impartial manner without the need for litigation.

“Appeals’ participation in IRS transformation and modernization efforts is critical to effectively and efficiently serving taxpayers,” said Deputy Chief of Appeals Liz Askey. “By leveraging technology, we can reduce cycle time and improve both the taxpayer and employee experience.”

The Appeals’ Focus Guide, which aligns with the objectives of the IRS Strategic Operating Plan (SOP), outlines the service initiatives taxpayers can expect over the coming year, including:

• Promoting digital platforms to improve how taxpayers communicate with Appeals.
• Promoting paperless processes and other modernization efforts.
• Helping taxpayers achieve tax certainty earlier in the dispute resolution process.
• Expanding access to in-person conferences and promoting video conferences for taxpayers who don’t live near an Appeals office.
• Collaborating with the tax practitioner community on continuing education opportunities for the Appeals workforce.

In line with the IRS’ recently announced paperless processing achievements, Appeals is working to make it easier for taxpayers to communicate digitally. Appeals now includes information about secure messaging in letters to taxpayers and will continue efforts to ensure taxpayers can conveniently communicate about their cases.

At its 2023 Practitioner Perspective series, tax practitioners shared insights with Appeals employees through panels focused on issues of mutual interest. Recordings of the common penalties and international information reporting penalties discussions are now available online. Appeals will continue these discussions to help ensure the best experience for taxpayers who have cases heard in Appeals.

Appeals also is leading an effort focused on resolving cases at the earliest stage possible. In fiscal year 2023 IRS sought public input to improve dispute resolution programs.

“The IRS is focused on transforming the agency to resolve taxpayer disputes with legal certainty at the earliest possible stage,” said Chief of Appeals Andy Keyso. “We’re looking forward to restructuring the alternative dispute resolution process this year to help achieve that objective, and we look forward to continuing to provide taxpayers an impartial administrative forum for resolving tax disputes without litigation.”

Achieving these initiatives requires providing the Appeals workforce with the right tools including training, technology and new processes. Recruiting and investing in training and technology for its workforce will help Appeals meet the goals outlined in its focus guide. Appeals is hiring and will continue to focus on employee training and manager development to strengthen its foundation of impartial, quality decision making.

IR-2023-234, Dec. 8, 2023

WASHINGTON — During open enrollment season for Flexible Spending Arrangements (FSAs), the Internal Revenue Service reminds taxpayers that they may be eligible to use tax-free dollars to pay medical expenses not covered by other health plans through their FSA.

For 2024, there is a $150 increase to the contribution limit for these accounts.

An employee who chooses to participate in an FSA can contribute up to $3,200 through payroll deductions during the 2024 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax.

If the plan allows, the employer may also contribute to an employee’s FSA. If the employee’s spouse has a plan through their employer, the spouse can also contribute up to $3,200 to that plan. In this situation, the couple could jointly contribute up to $6,400 for their household.

For FSAs that permit the carryover of unused amounts, the maximum 2024 carryover amount to 2025 is $640. For unused amounts in 2023, the maximum amount that can be carried over to 2024 is $610.

It’s important for taxpayers to annually review their health care selections during health care open enrollment season and maximize their savings.

Eligible employees of companies that offer a health flexible spending arrangement (FSA) need to act before their medical plan year begins to take advantage of an FSA during 2024. Self-employed individuals are not eligible.

Expenses to consider

Throughout the year, taxpayers can use FSA funds for qualified medical expenses not covered by their health plan. These can include co-pays, deductibles and a variety of medical products. Also covered are services ranging from dental and vision care to eyeglasses and hearing aids. Interested employees should check with their employer for details on eligible expenses and claim procedures.

Before enrollment (if an employer offers an FSA), review any expected health care expenses projected for the year. Participating employees should plan for healthcare activities when they calculate their contribution amounts. Consider:

• Updating medicine cabinet with necessary supplies.
• Big ticket expenses.
• Seasonal needs such as allergy products, sunscreen or warm steam vaporizers.
• Routine checkups or visits with specialists that regular insurance plans do not cover.
• Many over-the-counter items that are FSA eligible.
• Eye exams or dental visits: Out-of-pocket costs for dental and vision care are also covered by an FSA.

Employers are not required to offer FSAs. Interested taxpayers should check with their employer to see if they offer an FSA. More information about FSAs can be found at IRS.gov in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.

Adjusted Gross Income (AGI) is defined as gross income minus adjustments to income. Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income. Adjustments to Income include such items as Educator expenses, Student loan interest, Alimony payments or contributions to a retirement account. Your AGI will never be more than your Gross Total Income on you return and in some cases may be lower. Refer to the 1040 instructions (Schedule 1)PDF for more information.

If you are filing using the Married Filing Jointly filing status, the $73,000 AGI limitation applies to the AGI for both of you combined.

To e-file your federal tax return, you must verify your identity with your AGI or your self-select PIN from your 2021 tax return.

The American opportunity tax credit (AOTC) is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. You can get a maximum annual credit of $2,500 per eligible student. If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you.

The amount of the credit is 100 percent of the first $2,000 of qualified education expenses you paid for each eligible student and 25 percent of the next $2,000 of qualified education expenses you paid for that student. 

What is the child tax credit? The credit—currently up to $2,000 for each child in a family under age 17 at year-end—is a dollar-for-dollar reduction in taxes that many families with children can claim. It begins to phase out at $400,000 of adjusted gross income for married joint filers and $200,000 for single filers.

The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families get a tax break. If you qualify, you can use the credit to reduce the taxes you owe – and maybe increase your refund.