As tax day approaches, here’s some things to keep in mind about filing federal taxes in the US.
In the United States, April 15 is tax day, meaning that citizens and residents of the US will inform the Internal Revenue Service (“IRS”) — the department that oversees and enforces federal US tax laws — how much income they generated in 2023 through an income tax return filing.
Because most businesses automatically withhold an estimated amount of taxes from your paycheck throughout the year, most people have been paying taxes without thinking about it. But filing your taxes will determine if you overpaid or underpaid your taxes for the year and provide an opportunity to request a refund for any overpayments or even claim refundable tax credits.
If you underpaid, you may need to send the money that you owe to the IRS. But if you overpaid or qualify for tax credits, you’ll likely get that extra payment back via check or direct deposit, giving you an unanticipated boost in your budget and allowing you to pay off debt, add to your savings, or do some investing. Suddenly, tax season looks a little more exciting.
From updated rules to essential deadlines, here’s some things to keep in mind this tax season.
2024 tax day: Monday, April 15, 2024
The IRS started accepting tax returns on January 29, but you can file a return though April 15.
Filing as a US Resident: Most U.S. citizens and permanent residents must file a tax return for qualifying taxable income, subject to applicable thresholds and exceptions. The thresholds can be thought of as the minimum amount of earned income that will require an annual filing. The IRS thresholds vary based on your age and filing status, among other factors. IRS thresholds may change annually, and there are many rules and exceptions that can apply. Check the IRS fact sheet located here to better understand the filing requirement thresholds: IRS Fact Sheet.
Some common thresholds are:
*Single people under 65 if they make more than $13,850 in gross income.
*Single people over 65 if they make more than $15,700 in gross income.
*Married couples under 65 filing jointly if they made more than $27,700 in gross income.
Filing as a Non-Resident: Non-residents who still earn money are often required to pay taxes on any income earned in the U.S. Generally, both a federal and state level tax return will need to be filed.
*Non-residents usually rely on form 1040-NR (the U.S. Nonresident Alien income Tax Return), or form 1040-NR-EZ (U.S. Income Tax Return for Certain Nonresident Aliens with No Dependents), and may need to obtain an Individual Taxpayer Identification Number (ITIN) in order to process their returns. The IRS provides an ‘interactive tax assistant’ tool to help determine if you should file an application to receive an ITIN: IRS ITIN Assistance.
Tax extension deadline: October 15, 2024 (but you usually need to apply for an extension by April 15, 2024)
Who qualifies for an extension: You can apply for extra time as long as you properly request an extension by the applicable deadline. Common reasons for requesting an extension include missing documents, large financial changes — even just needing more time to figure it all out. But, an extension of time to file does not mean an extension of time to pay any taxes owed. If you believe you may owe tax, that payment is still due by the April 15th deadline.
How to file: Tax software such as TurboTax, H&R Block, TaxSlayer and Jackson Hewitt Online make it easy to calculate and submit your tax return electronically, but often charge fees. There is also a free filing option through the IRS website, where the IRS partners with certain companies to allow for limited free use of their tax software.
You’ll need tax forms from your employer to fill out the required income and tax withholding information, which is commonly referred to as a Form W2, Wage and Tax Statement. If you are self-employed, you’ll likely receive a Form 1099-NEC, Nonemployee Compensation. Most software allows you to submit your forms to the IRS electronically — and the faster you file, the faster you usually get that return back. Printing is also an option, if you feel more comfortable doing that.
Why do I need to file taxes? It’s the law — and failure to do so can result in hefty penalties. The Failure to File penalty for federal taxes (your filing with the IRS) charges 5.0 percent of the unpaid taxes for each month the payment is late. If you file and owe money, but don’t pay by April 15th, the IRS’s Failure to Pay penalty is 0.5 percent of the unpaid amount every month that it is late. (In both situations, the maximum penalty won’t exceed 25 percent of the unpaid tax amount.) Non-compliant parties can also be subject to criminal penalties in certain situations. And, each state may impose its own penalties for non-filing or late tax payments.
Stay tuned to the Pangea Pro Blog for more tax season information, from new deductions to payment solutions to ideas for saving your tax return.
DISCLAIMER – This content is for informational purposes only, it may become outdated, and we make no representations or warranties as to its reliability, accuracy, or applicability to your situation. Enova International Inc. and its subsidiaries, which includes Pangea and its affiliates, do not provide legal, tax, financial, or accounting advice. The information above is not intended to provide accounting, legal, or tax advice and you are encouraged to contact your financial professional or tax advisor for more information.
