Key Takeaways:
- There are many ways to get help filing your taxes, including several free services.
- The earlier you file, the sooner you can get your refund. Most people who file electronically and choose direct deposit receive their refunds within 21 days of filing. You can check the status of your refund by using the IRS “Where’s My Refund?” tool, which has been improved this year.
- If you can’t meet the tax-filing deadline, you can file for an extension, but you still need to pay the amount you expect to owe by April 15.
- Several key numbers for tax filing have been increased for inflation, including the standard deduction.
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After several years of big changes, this year’s tax-filing season is pretty simple.
We’re no longer dealing with pandemic-related tax laws and last-minute filing changes, but there are still some annual adjustments to know about – such as the increased standard deduction and tax brackets adjusted for inflation. And this is the first year in quite a while that federal income tax returns are actually due on April 15.
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Here’s what you need to know about filing your taxes for 2023 and making the most of your benefits:
There are several ways to file your taxes. You can do them yourself, use tax software or an online program, visit a tax preparer in person or virtually, or get help from a certified public accountant or enrolled agent. There are many levels of support – and associated costs – depending on your situation's complexity.
You may be able to file your taxes for free through IRS Free File – a program in which online tax prep companies partner with the IRS to offer their services for free if your 2023 adjusted gross income was below $79,000. For more information, visit the IRS website.
You may also be able to get free tax prep help through the IRS Volunteer Tax Assistance and Tax Counseling for the Elderly programs if you qualify. Check the IRS database to find out if these resources are available in your area.
Some tax software companies offer free programs that aren’t based on income. For example, from now through March 31, 2024, if you file Form 1040 and have limited credits only you can use TurboTax Free Edition and get help – plus a final review – from a tax expert through TurboTax Live Assisted Basic, says Lisa Greene-Lewis, CPA and tax expert with TurboTax.
TurboTax also offers several other levels of tax-filing software, such as TurboTax Premium, which provides guidance for investors and the self-employed. TurboTax Live Full Service will match customers to a virtual tax expert who can prepare their taxes in a day. Tax filers who used the service last tax season can choose to work with the same tax expert this year. TurboTax is also offering several other new products and ways to get help, both virtually and in-person.
H&R Block’s tax preparers also work in person and virtually. Services generally start at $89 plus state return fees if you want a preparer to handle your taxes, but prices can vary depending on how complex they are. H&R Block also offers several levels of do-it-yourself online tax preparation, with prices starting at $0 for simple returns.
This year, the company has expanded its DIY offering to include a new AI Tax Assist tool that provides filers with access to instant, unlimited help if they have questions while filing.
Jackson Hewitt Tax Services offers virtual and in-person tax filing, and it has nearly 3,000 locations in Walmart stores. Jackson Hewitt’s online DIY platform costs $25 to prepare your federal and state returns.
You can also find a licensed tax preparer, CPA or enrolled agent on your own. Enrolled agents are federally licensed tax preparers who are authorized to represent taxpayers in front of the IRS. You can find one through the National Association of Enrolled Agents website.
“A qualified tax and financial advisor may offer more than just short-term tax advice,” says Michael Trank, a CPA and accredited personal financial specialist in Irvine, California.
“They may address holistic issues such as preparation for retirement, planning and saving for important goals, maintaining retirement lifestyle, and estate planning objectives with consideration for family dynamics, tax efficiencies and risk tolerances,” he says.
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All paid tax preparers must have a preparer tax identification number, which they have to include when they sign your tax return. You can use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to make sure your preparer has the correct qualifications.
The IRS will begin accepting tax year 2023 returns on Jan. 29, 2024. You should wait until you receive your forms to file, such as your W-2 from your employer and any Form 1099s reporting earnings from other sources like interest, dividends, self-employment and unemployment compensation. Payers must send most of these forms by Jan. 31, although brokerage firms have until Feb. 15 to send some 1099 forms.
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You typically receive 1099s through the mail, or you may be able to find them online by logging into your account. If you work with an online tax-filing service, you may be able to automatically import your W-2s and 1099s directly from your payroll provider or financial institution.
You don’t need to wait until Jan. 29 to get started. IRS Free File will be available starting on Jan. 12, and many software companies will accept electronic submissions early and hold them until the IRS begins processing returns.
Federal income taxes are due on April 15, 2024, which is a Monday.
“For the first time in a few years, federal income taxes are due April 15,” says Mary Kay Foss, a CPA in Carlsbad, California. “The Emancipation Day holiday in Washington, D.C. gives extra time in many years, but not in 2024.”
State income taxes may have different deadlines – for example, Virginia state tax returns are generally due May 1.
People who live in areas affected by natural disasters may have later deadlines. For instance, the IRS extended the tax-filing deadline to June 17, 2024, for taxpayers in Tennessee counties that were declared a federal disaster area because of severe storms and tornadoes in December 2023. See the IRS list of disaster situations for areas that qualify for tax relief or extended deadlines.
The earlier you file, the sooner you can get your refund – and the less likely an identity thief will claim it before you do. Most people who file electronically and choose direct deposit receive their refunds within 21 days of filing.
Because of a law aimed to prevent fraud, however, the IRS cannot issue refunds that include the earned income tax credit and additional child tax credit before mid-February. Most early filers with those credits should expect to receive their refunds by Feb. 27 if they filed electronically, chose direct deposit and had no issues with their returns.
You’ll usually get your refund fastest if you file electronically and have the IRS deposit it directly into your bank account. You can check the status of your refund after you file by using the IRS "Where’s My Refund?" tool.
The IRS says to avoid delays in processing, people should file electronically whenever possible.
If you don’t owe money, there’s no penalty for missing the deadline – but you need to file a return to get your refund.
“There’s technically no penalty,” says Steven Hamilton, an enrolled agent with Hamilton Tax and Accounting in Grayslake, Illinois. “But you have to file within three years of the due date on the return or you lose out on your refund.”
The situation is very different if you owe the IRS. In that case, you could face two penalties.
“The penalty for not filing a tax return is potentially 10 times greater per month than the penalty for not paying in full,” says Brittany Benson, lead tax research analyst at the Tax Institute at H&R Block.
The late-filing penalty is up to 5% of the unpaid balance each month (up to a maximum of 25%), and the monthly penalty for failure to pay on time is 0.5% of the unpaid taxes.
“For example, for someone who owes $1,000, the failure-to-pay penalty starts at $5 per month but the penalty for failing to file a return starts at $50 per month,” she says.
If you can’t make the April 15 deadline, you can file IRS Form 4868 for an extension, which will push your tax-filing deadline to Oct. 15, 2024.
Some file an extension because they run out of time to gather their tax records or they’re waiting to receive some tax forms.
“Some people routinely file for an extension because they’re waiting for a Schedule K-1 from a partnership, S corporation or trust,” Foss says.
Although you can receive an extension to file, the money you owe is still due by the April 15, 2024, deadline.
“A lot of people think an extension is an extension to pay as well, but it’s only an extension to file,” Greene-Lewis says. “At least pay 90% of what you owe by April 15 to avoid any penalties.”
If you can’t pay the full amount, try to file and pay what you can, then work with the IRS to make an installment agreement, she says.
Don’t forget about your state income-tax deadline, too.
"When filing extensions and making your extension payments, it’s important to remember to extend your state return and pay your estimated taxes due by the original due date as well,” says Chelsea Monk, an enrolled agent with Hamilton Tax & Accounting in Grayslake, Illinois, says.
“Each state gets to make their own rules regarding whether they accept the federal extension or require their own, whether an extension if valid if you don’t make a payment with it or don’t pay at least a certain percent of the taxes owed,” she adds.
You generally have to file a federal income tax return if your gross income exceeds the standard deduction.
For tax year 2023, the standard deduction is $13,850 for single filers, $20,800 for head of household and $27,700 for married filing jointly. Taxpayers 65 and older can claim an extra $1,850 deduction if they are single or file as head of household. Joint filers who are 65 or older can each get an extra $1,500.
These inflation adjustments are more significant than in previous years, Greene-Lewis says.
Dependents must generally file a return if they have unearned income of more than $1,250 or earned income of more than $13,850, Benson says. They also must file if they have gross income of more than $1,250 or earned income of up to $13,450 plus $400.
Note that your state may have different filing requirements.
You or your dependent may still want to file a federal income tax return even if you don't have to. For example, you could get a refund if your employer withheld taxes from your paychecks or you could qualify for the EIC even if you earned less than the filing requirement.
“The IRS reports that they have over $1 billion in unclaimed refunds every year,” Greene-Lewis says. “The average (unclaimed) refund owed is for over $800, and it doesn’t hurt to file.”
You have up to three years after the filing deadline to file a return and get a refund.
Filing an income tax return also starts the clock ticking on the statute of limitations for the IRS to initiate an audit, which is generally three years from the tax-filing deadline or, if later, three years from the date you filed your return.
“If you don’t file a tax return, the statute of limitations doesn’t start,” Hamilton says.
If you worked with an enrolled agent or CPA, let them know about the audit – they should be able to help and can represent you in front of the IRS. If you filed your return through a tax preparer or software service, they may be able to help, too.
Enrolled agents often specialize in audits and complex tax-filing situations.
“We have 25 to 50 audit cases open at any time, and they’re referred to use throughout the year,” Hamilton says. “If you’re audited, reach out to an accountant – you have a right to representation.”
“People should keep the returns themselves forever,” Foss says. “The supporting records can be shredded earlier.”
Many tax experts recommend keeping your tax returns (or digital copies) for an unlimited amount of time. They can be helpful if you apply for a mortgage or disability insurance, need to prove your income for your Social Security record or show how much you’ve made in tax-deductible contributions to your retirement savings through the years.
You need to keep your supporting documents for at least three years after the tax-filing deadline, which is the length of time the IRS generally has to initiate an audit. That time frame rises to six years if you omit 25% or more of your income, which may be more likely to happen if you have self-employment income from several sources.
“I usually recommend that people keep the supporting documents for seven years after filing,” Foss says.
And you need to keep some records for longer. “Records related to the purchase or improvement of an asset like a personal residence or marketable security should be kept until seven years after the asset is sold,” she says.
Note that some states have a different time frame for initiating an audit.
If you owe the IRS money, you have several options. You can write a check, pay directly online from your bank account using the IRS Direct Pay or use a credit or debit card. See the IRS’s Paying Your Taxes for details about your payment options. If you can’t pay the full amount by the deadline, you can apply for an installment agreement.
“If a taxpayer cannot pay their federal tax liability by the due date but can pay within 180 days or less, they may request a short-term payment plan online or by phone,” Trank says. “There is no setup fee, but interest and penalties will be charged on unpaid balances until paid.”
If the taxpayer needs more than 180 days, they can request an installment plan either online or by filing a Form 9465 Installment Agreement Request. There is a one-time setup fee that costs from $31 to $225 depending on whether you apply online, by phone or mail – and how you plan on paying the tax, Trank says. Low-income taxpayers may be able to get a fee waiver.
Most states also collect income taxes. State income tax returns are generally due by April 15, 2024, although some have different deadlines. Check with your state's department of revenue for details.
You may be eligible for Free File for your state income taxes based on your income – or, you can use software or hire a CPA, enrolled agent or tax preparer to do them.
Alaska, Florida, Nevada, South Dakota, Tennessee, Texas and Wyoming don’t have individual income taxes. New Hampshire has no individual income tax but it does tax some dividend and interest income. Washington state has no wage income tax, but it now has a tax on high earners’ capital gains income.
You generally have up to three years from the tax-filing deadline to file an amended return if you left something out or realize you made a mistake. File Form 1040X with the changes and submit any additional forms affected by the change. If you claim additional deductions or credits, you can get an extra refund.
If you discover an error before the filing due date, you should file a superseding tax return before the due date, Trank says.
Standard deduction. The standard deduction is the amount that you can deduct regardless of your expenses. For 2023, the standard deduction for those under 65 is $13,850 for single filers, $20,800 for head of household and $27,700 for married filing jointly. Taxpayers 65 and older can claim an extra $1,850 deduction if they are single or file as head of household, or $1,500 per person age 65 or older if they file jointly.
Itemized deductions. These deductions are based on certain expenses like charitable contributions, mortgage interest, state and local taxes (up to $10,000 per year) and medical expenses that are more than 7.5% of your adjusted gross income. If your itemized deductions add up to more than your standard deduction, you must file a Schedule A to report them instead of taking the standard deduction.
Tax deduction: A tax deduction reduces your taxable income. For example, you may be able to deduct contributions to a traditional IRA, health savings account or, if you’re self-employed, a simplified employee pension individual retirement account or Solo 401(k).
Tax credit: A tax credit simply reduces your tax liability. A $300 credit, for example, can reduce your liability by $300. A nonrefundable tax credit can provide a refund only up to the amount you owe. A refundable tax credit provides a refund even if it’s more than you owe. Some common tax credits include the American opportunity tax credit and lifetime learning credit (for education expenses), child and dependent care credit and retirement savings contributions credit.
Withholding: This refers to the amount of money employers take out of employees’ paychecks to cover federal income taxes, state taxes and other obligations. You can also have taxes withheld from a pension and unemployment or Social Security benefits.
W-4: This is the IRS form you submit to let your employer know how much money to withhold from your paycheck for taxes. It’s a good idea to run your numbers through the IRS withholding estimator and adjust your W-4 with your employer so you don’t have a large bill due at tax time. If you received a large refund, adjusting your W-4 to reduce your withholding could help you get more money in your paychecks instead.
W-2: This form reports to the IRS your annual wages and the amount of taxes withheld from your paychecks for federal and state income taxes.
1099: This form reports other kinds of income like self-employed or freelance earnings, dividends, and interest and unemployment benefits.
Schedule C: This is the tax form you typically need to file if you have income from self-employment. You can use it to report your income and deduct business expenses.
Tax return: A tax return is the form you file that outlines your income, expenses, deductions, credits and other tax-related information to the IRS or your state's department of revenue.
Tax refund: This is the money returned to you when your tax liability is less than the amount you paid through the year, either through withholding or estimated taxes.
Maryalene LaPonsieDec. 12, 2023
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