January 31, 2024
The federal income tax filing deadline isn’t until April. However, the start of tax season is nearly upon us. Here are some tips for navigating the tax filing process to help lessen some of the stress you may feel as Tax Day arrives.
Compile your tax documents and organize them. Print off digital documents so they are all together (unless you are e-filing) for a more manageable filing year.
Your filing status is the rate at which income is taxed. There are five filing statuses: single, married filing separately, married filing jointly, head of household, and qualifying widow(er) with dependent child filing status.
The IRS has partnered with several companies to provide electronic filing to the public. Some of these options include TurboTax, H&R Block, and TaxSlayer.
A financial professional can work with you to get the most benefit from your tax filing.
For the 2024 tax year, according to the IRS, the top tax rate remains 37% for individual single taxpayers with incomes greater than $609,350 (731,200 for married couples filing jointly).
Other marginal tax rates include:
The Alternative Minimum Tax exemption, which impacts approximately 0.8% of the U.S. population, goes into effect if income is above the annual AMT exemption amount. This generally applies to taxpayers with high incomes, ensuring these taxpayers pay at least the minimum tax amount owed. Their tax is calculated under regular tax rules and AMT rules, and they pay the higher amount of the two. For 2024, the AMT exemption amount is $85,700 and starts to phase out at $609,350 ($133,300 for married couples filing jointly whose phase out begins at $1,218,700).
The Earned Income Tax Credit amount is $7,830 for qualifying taxpayers in 2024. To qualify, you must meet the basic rules:
* There are also special qualifying rules for members of the military, clergy, and taxpayers and their relatives with disabilities.
Items that are unaltered by indexing due to the Tax Cuts and Jobs Act of 2017. This may change upon sunsetting of the Tax Cuts and Jobs Act at the close of 2025.
Identity theft is a severe problem in today’s technological world. To help mitigate the risk of identity theft, consider taking these steps:
Always keep your devices on your person or in a secure location, and ensure your passwords are strong.
Criminals steal your social security number in an attempt to obtain credit or even a job in your name.
Monitoring your accounts on a regular basis can help you recognize if someone is using your identity to file a fake tax return to claim a fraudulent refund. They may also use this information to get a job or claim your child as a dependent on a phony return.
Phishing involves people sending emails or other messages posing as a family member, friend, or legitimate company to attempt to steal information. Never click on links or open emails from anyone you don’t know.
Be sure only to get tax help from a legitimate tax preparer.
Changing your passwords often and ensuring you aren’t repeating them for multiple accounts helps to prevent identity thieves from gaining access to your personal information.
The IRS may send letters 4883C or 6330C asking you to verify your identity. Call the toll-free number provided in the letter to help keep your identity secure. Until the IRS hears from you, they won’t be able to process your tax return, issue refunds, or credit any overpayments to your account.
A financial professional can help you take the necessary steps to keep your information out of the hands of identity thieves and provide guidance for a more manageable and efficient tax filing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
IRS provides tax inflation adjustments for tax year 2024 | Internal Revenue Service
What Does It Mean to Be Tax-Exempt or Have Tax-Exempt Income? (investopedia.com)
Electronic Filing (e-file) | Internal Revenue Service (irs.gov)
Credits & Deductions for Individuals | Internal Revenue Service (irs.gov)
Taxpayer guide to identity theft | Internal Revenue Service (irs.gov) 3 Ways Identity Thieves Steal Your Tax Refund and How to Prevent It – SC Office of the State Treasurer
A Comprehensive Guide to 2024 Tax Credits | SmartAsset
Who Qualifies for the Earned Income Tax Credit (EITC) | Internal Revenue Service (irs.gov)
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