2024 Retirement Plan Limits
Some IRA and retirement plan limits are indexed for inflation each year. Several of these key numbers have increased once again for 2024.
How much can you save in an IRA?
The maximum amount you can contribute to a traditional IRA or a Roth IRA in 2024 will be $7,000 (or 100% of your earned income, if less), up from $6,500 in 2023. The maximum catch-up contribution for those age 50 or older remains $1,000. You can contribute to both a traditional IRA and a Roth IRA in 2024, but your total contributions cannot exceed these annual limits.
Can you deduct your traditional IRA contributions?
If you (or if you’re married, both you and your spouse) are not covered by a work-based retirement plan, your contributions to a traditional IRA are generally fully tax deductible.
If you’re married, filing jointly, and you’re not covered by an employer plan, but your spouse is, you may generally claim a full deduction if your modified adjusted gross income (MAGI) is $230,000 or less (up from $218,000 or less in 2023). Your deduction is limited if your MAGI is between $230,000 and $240,000 (up from $218,000 and $228,000 in 2023) and eliminated if your MAGI is $240,000 or more (up from $228,000 in 2023).
For those who are covered by an employer plan, deductibility depends on income and filing status. If your filing status is single or head of household, you can fully deduct your IRA contribution in 2024 if your MAGI is $77,000 or less (up from $73,000 in 2023). If you’re married and filing a joint return, you can fully deduct your contribution if your MAGI is $123,000 or less (up from $116,000 in 2023). For taxpayers earning more than these thresholds, the following phaseout limits apply.
|
If your 2024 federal income tax filing status is: |
Your IRA deduction is limited if your MAGI is between: |
Your deduction is eliminated if your MAGI is: |
|
Single or head of household |
$77,000 and $87,000 |
$87,000 or more |
|
Married filing jointly or qualifying widow(er) |
$123,000 and $143,000 (combined) |
$143,000 or more (combined) |
|
Married filing separately |
$0 and $10,000 |
$10,000 or more |
Can you contribute to a Roth IRA?
The income limits for determining whether you can contribute to a Roth IRA will also increase in 2024. If your filing status is single or head of household, you can contribute the full $7,000 ($8,000 if you are age 50 or older) to a Roth IRA if your MAGI is $146,000 or less (up from $138,000 in 2023). And if you’re married and filing a joint return, you can make a full contribution if your MAGI is $230,000 or less (up from $218,000 in 2023). For taxpayers earning more than these thresholds, the following phaseout limits apply.
|
If your 2024 federal income tax filing status is: |
Your Roth IRA contribution is limited if your MAGI is between: |
You cannot contribute to a Roth IRA if your MAGI is: |
|
Single or head of household |
$146,000 and $161,000 |
$161,000 or more |
|
Married filing jointly or qualifying widow(er) |
$230,000 and $240,000 (combined) |
$240,000 or more (combined) |
|
Married filing separately |
More than $0 but less than $10,000 |
$10,000 or more |
How much can you save in a work-based plan?
If you participate in an employer-sponsored retirement plan, you may be pleased to learn that you can save even more in 2024. The maximum amount you can contribute (your “elective deferrals”) to a 401(k) plan will increase to $23,000 in 2024 (up from $22,500 in 2023). This limit also applies to 403(b) and 457(b) plans, as well as the Federal Thrift Savings Plan. If you’re age 50 or older, you can also make catch-up contributions of up to $7,500 to these plans in 2024 (unchanged from 2023). [Special catch-up limits apply to certain participants in 403(b) and 457(b) plans.]
The amount you can contribute to a SIMPLE IRA or SIMPLE 401(k) will increase to $16,000 in 2024 (up from $15,500 in 2023), and the catch-up limit for those age 50 or older remains $3,500. (Note that in 2024, new rules take effect that permit certain small employers to allow additional contributions.)
|
Plan type: |
2024 deferral limit: |
Catch-up limit: |
|
401(k), 403(b), governmental 457(b), Federal Thrift Savings Plan |
$23,000 |
$7,500 |
|
SIMPLE plans |
$16,000 |
$3,500 |
Note: Contributions can’t exceed 100% of your income.
If you participate in more than one retirement plan, your total elective deferrals can’t exceed the annual limit ($23,000 in 2024 plus any applicable catch-up contributions). Deferrals to 401(k) plans, 403(b) plans, and SIMPLE plans are included in this aggregate limit, but deferrals to Section 457(b) plans are not. For example, if you participate in both a 403(b) plan and a 457(b) plan, you can save the full amount in each plan — a total of $46,000 in 2024 (plus any catch-up contributions).
The maximum amount that can be allocated to your account in a defined contribution plan [for example, a 401(k) plan or profit-sharing plan] in 2024 is $69,000 (up from $66,000 in 2023) plus age 50 or older catch-up contributions. This includes both your contributions and your employer’s contributions. Special rules apply if your employer sponsors more than one retirement plan.
Finally, the maximum amount of compensation that can be taken into account in determining benefits for most plans in 2024 is $345,000 (up from $330,000 in 2023), and the dollar threshold for determining highly compensated employees (when 2024 is the look-back year) increases to $155,000 (up from $150,000 when 2023 is the look-back year).
2023 Charitable Giving
There is still time in 2023 for year-end planning. Your planning may include charitable giving. The tax benefits associated with charitable giving could potentially enhance your ability to give and should be considered as part of your year-end tax planning.
There may be tax benefits for making charitable gifts
If you itemize deductions on your federal income tax return, you can generally deduct your gifts to qualified charities. This may also help increase your gift.
Example: Assume you want to make a charitable gift of $1,000. One way to potentially enhance the gift is to increase it by the amount of any income taxes you save with the charitable deduction for the gift. At a 24% tax rate, you might be able to give $1,316 to charity [$1,000 ÷ (1 – 24%) = $1,316; $1,316 x 24% = $316 taxes saved]. On the other hand, at a 32% tax rate, you might be able to give $1,471 to charity [$1,000 ÷ (1 – 32%) = $1,471; $1,471 x 32% = $471 taxes saved].
Tax benefits may be limited to certain percentages of your adjusted gross income (AGI). Your deduction for gifts to charity is limited to 50% (currently increased to 60% for cash contributions to public charities), 30%, or 20% of your AGI, depending on the type of property you give and the type of organization to which you contribute. Charitable deductions that exceed the AGI limits may generally be carried over and deducted over the next five years, subject to the income percentage limits in those years.
Make sure to retain proper substantiation of your charitable contributions. To claim a charitable deduction for any contribution of cash, a check, or other monetary gift, you must maintain a record of such contributions through a bank record (such as a cancelled check, a bank or credit union statement, or a credit-card statement) or a written communication (such as a receipt or letter) from the charity showing the name of the charity, the date of the contribution, and the amount of the contribution. If you claim a charitable deduction for any contribution of $250 or more, you must substantiate the contribution with a contemporaneous written acknowledgment of the contribution from the charity. If you make any noncash contributions, there are additional requirements.
Year-end tax planning
When making charitable gifts at the end of the year, you should consider them as part of your year-end tax planning. Typically, you have a certain amount of control over the timing of income and expenses. You generally want to time your recognition of income so that it will be taxed at the lowest rate possible, and time your deductible expenses so they can be claimed in years when you are in a higher tax bracket.
For example, if you expect to be in a higher tax bracket next year, it may make sense to wait and make the charitable contribution in January so that you can take the deduction next year when the deduction results in a greater tax benefit. Or you might shift the charitable contribution, along with other deductions, into a year when your itemized deductions would be greater than the standard deduction amount. And if the income percentage limits above are a concern in one year, you might consider ways to shift income into that year or shift deductions out of that year, so that a larger charitable deduction is available for that year. A tax professional can help you evaluate your individual tax situation.
There are other methods of making charitable gifts. These generally are subject to additional documentation and other complexities.
Using appreciated securities that have been held for more than year allows the appreciation (gains) to be included in the amount of the contribution without paying tax on the gains.
Making Qualified Charitable Distributions (QCD) is another technique. If you or your spouse are over 70 ½ the first $100,000 of each your required minimum distributions (RMD) will reduce the taxable amount of you RMD.
Caution
When making charitable contributions, be sure to deal with recognized charities and be wary of charities with names that sound like reputable charitable organizations. It is common for scam artists to impersonate reputable charities using bogus websites as well as misleading email, phone, social media, and in-person solicitations. Check out the charity on the IRS website, irs.gov, using the Tax-Exempt Organization Search tool. And remember, don’t send cash; contribute by check or credit card.
2023 Year-End Tax Tips to Consider
This is a good time to review your tax situation for 2023. Allow enough time to complete the changes before year-end. Check with your custodian for the deadlines for completing by December 31, 2023. Following are some actions to consider before the end of the year. Many of these items will depend on your expected tax bracket in 2023 compared to 2024.
1. Defer income to next year
Consider opportunities to defer income to 2024, particularly if you think you may be in a lower tax bracket then. For example, you may be able to defer a year-end bonus or delay the collection of business debts, rents, and payments for services. Doing so may enable you to postpone payment of tax on the income until next year.
2. Accelerate deductions
Consider opportunities to accelerate deductions into the current tax year. If you itemize deductions, making payments for deductible expenses such as qualifying interest, state taxes, and medical expenses before the end of the year rather early in 2024. Alternating, payments in 2014 may result in a benefit by exceeding the standard deduction.
3. Make deductible charitable contributions
If you itemize deductions on your federal income tax return, you can generally deduct charitable contributions, but the deduction is limited to 50% (currently increased to 60% for cash contributions to public charities), 30%, or 20% of your adjusted gross income (AGI), depending on the type of property you give and the type of organization to which you contribute. (Excess amounts can be carried over for up to five years.)
There may be an advantage if you contribute appreciated securities. The gain on the securities will not be taxed if you held the security for more than a year.
For those 701/2 or older it may be beneficial to use direct payments using your required minimum distributions (Qualified Charitable Distributions.) To qualify for this strategy, it is important to meet the IRS requirement.
4. Increase withholding to cover a tax shortfall
If you will owe federal income tax for the year, consider increasing your withholding on Form W-4 for the remainder of the year to cover the shortfall. Time may be limited for employees to request a Form W-4 change and for their employers to implement it in time for 2023. The biggest advantage in doing so is that withholding is considered as having been paid evenly throughout the year instead of when the dollars are taken from your paycheck. This strategy can be used to make up for low or missing quarterly estimated tax payments.
You can also have tax withheld from distributions from some financial accounts.
5. Save more for retirement
Deductible contributions to a traditional IRA and pre-tax contributions to an employer-sponsored retirement plan such as a 401(k) can reduce your 2023 taxable income. If you haven’t already contributed up to the maximum amount allowed, consider doing so. For 2023, you can contribute up to $22,500 to a 401(k) plan ($30,000 if you’re age 50 or older) and up to $6,500 to traditional and Roth IRAs combined ($7,500 if you’re age 50 or older).* The window to make 2023 contributions to an employer plan generally closes at the end of the year, while you have until April 15, 2024, to make 2023 IRA contributions.
*Roth contributions are not deductible, but Roth qualified distributions are not taxable.
6. Take required minimum distributions
If you are age 73 or older, you generally must take required minimum distributions (RMDs) from traditional IRAs and employer-sponsored retirement plans (special rules apply if you’re still working and participating in your employer’s retirement plan). You have to make the withdrawals by the date required — the end of the year for most individuals. The penalty for failing to do so is substantial: 25% of any amount that you failed to distribute as required (10% if corrected in a timely manner).
7. Weigh year-end investment moves
You should not let tax considerations drive your investment decisions. However, it’s worth considering the tax implications of any year-end investment moves that you make. For example, if you have realized net capital gains from selling securities at a profit, you might avoid being taxed on some or all of those gains by selling losing positions. Any losses over and above the amount of your gains can be used to offset up to $3,000 of ordinary income ($1,500 if your filing status is married filing separately) or carried forward to reduce your taxes in future years.
IRS Standard Mileage Rates for 2023
IRS has increased the optional standard mileage rates for computing the deductible costs of operating an automobile for business purposes for 2023. The rates for business use are revised to reflect recent increases in the price of fuel. Standard mileage rates for medical and moving expense purposes remain the same for 2023. The standard mileage rate for computing the deductible costs of operating an automobile for charitable purposes is set by statute and remains unchanged.
For 2023, the standard mileage rates are as follows:
Business use of auto: 65.5 cents per mile (up from 62.5 cents for the period July 1, 2022, to December 31, 2022*) may be deducted if an auto is used for business purposes. If you are an employee, your employer can reimburse you for your business travel expenses using the standard mileage rate. However, if you are an employee and your employer does not reimburse you for your business travel expenses, you cannot currently deduct your unreimbursed travel expenses as miscellaneous itemized deductions.
Charitable use of auto: 14 cents per mile (the same as for 2022) may be deducted if an auto is used to provide services to a charitable organization if you itemize deductions on your income tax return. Your charitable deduction may be limited to certain percentages of your adjusted gross income, depending on the type of charity.
Medical use of auto: 22 cents per mile (the same as for the period July 1, 2022, to December 31, 2022*) may be deducted if an auto is used to obtain medical care (or for other deductible medical reasons) if you itemize deductions on your income tax return. You can deduct only the part of your medical and dental expenses that exceeds 7.5% of the amount of your adjusted gross income.
Moving expense use of auto: 22 cents per mile (the same as for the period July 1, 2022, to December 31, 2022*) may be deducted if an auto is used by a member of the Armed Forces on active duty to move, pursuant to a military order, to a permanent change of station (unless such expenses are reimbursed). The deduction for moving expenses is not currently available for other taxpayers.
*Last year, in a rare mid-year adjustment to the standard mileage rates, the IRS increased the rates for the second half of 2022.
Increased Standard Mileage Rates for July 1 through December 31, 2022
IRS , in response to the increased price of gas, increased optional standard mileage rates for the last half of 2022. The rates are used for computing the deduction for automobiles used for business, medical, and moving expense. The rate did not change for calculating the deduction for use of an automobile for charitable purposes as the rate is set by statute which did not change.
The change applies for the second half of 2022 are:
Business use of auto: 62.5 cents per mile (up from 58.5 cents for January 1, 2022, to June 30, 2022) may be deducted if an auto is used for business purposes. If you are an employee, your employer can reimburse you for your business travel expenses using the standard mileage rate. However, if you are an employee and your employer does not reimburse you for your business travel expenses, you cannot currently deduct your unreimbursed travel expenses as miscellaneous itemized deductions.
Charitable use of auto: 14 cents per mile (the same as for January 1, 2022, to June 30, 2022) may be deducted if an auto is used to provide services to a charitable organization if you itemize deductions on your income tax return. Your charitable deduction may be limited to certain percentages of your adjusted gross income, depending on the type of charity.
Medical use of auto: 22 cents per mile (up from 18 cents for January 1, 2022, to June 30, 2022) may be deducted if an auto is used to obtain medical care (or for other deductible medical reasons) if you itemize deductions on your income tax return. You can deduct only the part of your medical and dental expenses that exceeds 7.5% of the amount of your adjusted gross income.
Moving expense: 22 cents per mile (up from 18 cents for January 1, 2022, to June 30, 2022) may be deducted if an auto is used by a member of the Armed Forces on active duty to move, pursuant to a military order, to a permanent change of station (unless such expenses are reimbursed). The deduction for moving expenses is not currently available for other taxpayers.
The IRS normally updates the standard mileage rates once a year in the fall for the next calendar year. Mid-year increases in the standard mileage rates are rare — the last time the IRS made such an increase was in 2011.
IRS Announcement 2022-13
Roth Conversions are getting a lot of attention
Some consider the drop in the markets maybe a good time for some to consider converting traditional IRAs to Roth IRAs. The withdrawal of the assets from the traditional IRA would be taxed currently. The resulting tax would be lower as the value of the investment would be lower. The future growth of the assets would not be taxable in the Roth or to the beneficiaries of the Roth. There are many assumptions and conditions to achieve the desired benefits.
Tax rate assumptions
One assumption is that you will be in a lower tax bracket when you retire. A related assumption is that the tax laws will not change when the funds are distributed from the Roth. One approach would be to calculate your tax based on various assumptions. Depending on your current tax bracket and assumed future tax brackets to see how much to convert now.
Future values
There is a risk that the value of the investment will not grow or will drop in value.
Two five-year tests
To qualify for tax-free and penalty-free withdrawal of earnings, including earnings on converted amounts, a Roth account must meet a five-year holding period beginning January 1 of the year your first Roth account was opened, and the withdrawal must take place after age 59½ or meet an IRS exception. If you have had a Roth IRA for some time, this may not be an issue, but it could come into play if you open your first Roth IRA for the conversion.
Assets converted to a Roth IRA can be withdrawn free of ordinary income tax at any time, because you paid taxes at the time of the conversion. However, a 10% penalty may apply if you withdraw the assets before the end of a different five-year period, which begins January 1 of the year of each conversion, unless you are age 59½ or another exception applies.
Roth account are not subject to Required Minimum Distributions (RMD)
Roth IRAs are not required to minimum distributions. Distributions are tax-free to the original owner of the Roth IRA and spouse beneficiaries who treat a Roth IRA as their own. Other beneficiaries inheriting a Roth IRA are subject to the RMD rules. The longer your investments can pursue growth, the more advantageous it may be for you and your beneficiaries to have tax-free income.
There are many considerations and assumption in determining if a Roth Conversion is appropriate for anyone. The above is not intended as a complete discussion of the subject. A trusted advisor should be consulted to see if a conversion should be considered .
All investing involves risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful.
IRS Releases 2023 Key Numbers for Health Savings Accounts
The IRS has released the 2023 contribution limits for health savings accounts (HSAs), as well as the 2023 minimum deductible and maximum out-of-pocket amounts for high-deductible health plans (HDHPs). An HSA is a tax-advantaged account that’s paired with an HDHP. An HSA offers several valuable tax benefits:
You may be able to make pre-tax contributions via payroll deduction through your employer, reducing your current income tax.
If you make contributions on your own using after-tax dollars, they’re deductible from your federal income tax (and perhaps from your state income tax) whether you itemize or not.
Contributions to your HSA, and any interest or earnings, grow tax deferred.
Contributions and any earnings you withdraw will be tax-free if used to pay qualified medical expenses.
Key tax numbers for 2022 and 2023.
Health Savings Accounts
Annual contribution limit 2022 2023
Self-only coverage $3,650 $3,850
Family coverage $7,300 $7,750
High-deductible health plan: self-only coverage 2022 2023
Annual deductible: minimum $1,400 $1,500
Annual out-of-pocket expenses required to be paid
(other than for premiums) can’t exceed $7,050 $7,500
High-deductible health plan: family coverage 2022 2023
Annual deductible: minimum $2,800 $3,000
Annual out-of-pocket expenses required to be paid (other than for premiums) can’t exceed
$14,100 $15,000
Catch-up contributions
Annual catch-up contribution limit for individuals age 55 or older $1,000 2022 and 2023
The IRS has released the 2023 key tax numbers for health savings accounts (HSAs) and high-deductible health plans (HDHPs).
2021 Federal Income Tax Returns are Due April 18, 2022 For Most Individuals
If you live in Maine or Massachusetts the due date is April 19, 2022.
You can extend the filing date.
You can file for an extension by filing IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return by the April due date. The extension gives you an additional six months (until October 17, 2022) to file your federal income tax return. You can also file for an automatic six-month extension electronically (details on how to do so can be found in the Form 4868 instructions). There may be penalties for failing to file or for filing late.
Note: Special rules apply if you’re living outside the country, or serving in the military outside the country, on the regular due date of your federal income tax return.
Include a payment if possible.
File the return, and pay as much as you can afford if you absolutely cannot pay what you owe. You’ll owe interest and possibly penalties on the unpaid tax. You will limit the penalties assessed by filing your return on time, and you may be able to work with the IRS to pay the unpaid balance (options available may include the ability to enter into an installment agreement).
It’s important to understand that filing for an automatic extension to file your return does not provide any additional time to pay your tax. When you file for an extension, you must estimate the amount of tax you will owe. Paying the full amount by the April filing due date will reduce interest and penalties based on the amount not paid. IRS may void the extension if your estimate of taxes was not reasonable.
Tax refunds
The IRS encourages taxpayers seeking tax refunds to file their tax returns as soon as possible. The IRS anticipates most tax refunds being issued within 21 days of the IRS receiving a tax return if the return is filed electronically, the tax refund is delivered through direct deposit, and there are no issues with the tax return. To avoid delays in processing, the IRS encourages people to avoid paper tax returns whenever possible.
IRA contributions
Contributions to an individual retirement account (IRA) for 2021 can be made up to the April due date (without regard to extensions) for filing the 2021 federal income tax return.
Common Tax Scams to Watch For
Internal Revenue Service has issued numerous Tax Sam/Consumer Alerts (1). According to the Internal Revenue Service (IRS), tax scams tend to increase during tax season and/or times of crisis.(2). Following
are some of the scams to watch out for.
Phishing and text message scams
Phishing and text message scams usually involve unsolicited emails or text messages that seem to come from legitimate IRS sites to convince you to provide personal or financial information. Once scam artists obtain this information, they use it to commit identity or financial theft. The IRS does not initiate contact with taxpayers by email, text message, or any social media platform to request personal or financial information. The IRS initiates most contacts through regular mail delivered by the United States Postal Service.
Phone scams
Phone scams typically involve a phone call from someone claiming that you owe money to the IRS, or you’re entitled to a large refund. The calls may show up as coming from the IRS on your Caller ID, be accompanied by fake emails that appear to be from the IRS, or involve follow-up calls from individuals saying they are from law enforcement. These scams often target more vulnerable populations, such as immigrants and senior citizens, and will use scare tactics such as threatening arrest, license revocation, or deportation.
Tax-related identity theft
Tax-related identity theft occurs when someone uses your Social Security number to claim a fraudulent tax refund. You may not even realize you’ve been the victim of identity theft until you file your tax return and discover that a return has already been filed using your Social Security number. Or the IRS may send you a letter indicating it has identified a suspicious return using your Social Security number. To help prevent tax-related identity theft, the IRS now offers the Identity Protection PIN Opt-In Program. The Identity Protection PIN is a six-digit code that is known only to you and the IRS, and it helps the IRS verify your identity when you file your tax return.
Tax preparer fraud
Scam artists will sometimes pose as legitimate tax preparers and try to take advantage of unsuspecting taxpayers by committing refund fraud or identity theft. Be wary of any tax preparer who won’t sign your tax return (sometimes referred to as a “ghost preparer”), requires a cash-only payment, claims fake deductions/tax credits, directs refunds into his or her own account, or promises an unreasonably large or inflated refund. A legitimate tax preparer will generally ask for proof of your income and eligibility for credits and deductions, sign the return as the preparer, enter a valid preparer tax identification number, and provide you with a copy of your return. It’s important to choose a tax preparer carefully because you are legally responsible for what’s on your return, even if it’s prepared by someone else.
False offer in compromise
An offer in compromise (OIC) is an agreement between a taxpayer and the IRS that can help the taxpayer settle tax debt for less than the full amount that is owed. Unfortunately, some companies charge excessive fees and falsely advertise that they can help taxpayers obtain larger OIC settlements with the IRS. Taxpayers can contact the IRS directly or use the IRS Offer in Compromise Pre-Qualifier tool at https://irs.treasury.gov/oic_pre_qualifier/ to see if they qualify for an OIC.
Unemployment insurance fraud
Typically, this scheme is perpetrated by scam artists who try to use your personal information to claim unemployment benefits. If you receive an unexpected prepaid card for unemployment benefits, see an unexpected deposit from your state in your bank account, or receive IRS Form 1099-G for unemployment compensation that you did not apply for, report it to your state unemployment insurance office as soon as possible.
Fake charities
Charity scammers pose as legitimate charitable organizations to solicit donations from unsuspecting donors. These scam artists often take advantage of ongoing tragedies and/or disasters, such as a devastating tornado or the COVID-19 pandemic. Be wary of charities with names that are like more familiar or nationally known organizations. Before donating to a charity, make sure it is legitimate and never donate cash, gift cards, or funds by wire transfer. The IRS website has a tool to assist you in checking out the status of a charitable organization at https://www.irs.gov/charities-and-nonprofits.
Protecting yourself from scams
Fortunately, there are some things you can do to help protect yourself from scams, including those that target taxpayers:
- Don’t click on suspicious or unfamiliar links in emails, text messages, or instant messaging services — visit government websites directly for valuable information
- Don’t answer a phone call if you don’t recognize the phone number — instead, let it go to voicemail and check later to verify the caller
- Never download email attachments unless you can verify that the sender is legitimate
- Keep device and security software up to date, maintain strong passwords, and use multi-factor authentication
- Never share personal or financial information via email, text message, or over the phone
1) https://www.irs.gov/newsroom/tax-scams-consumer-alerts
2) Internal Revenue Service, 2022
Federal Income Tax Filing Season Has Begun for 2021 Returns
The IRS announced that the starting date for when it would accept and process 2021 tax-year returns was Monday, January 24, 2022.
Tips for making filing easier
To speed refunds and help with tax filing, the IRS suggests the following:
• Make sure you have received Form W-2 and other earnings information, such as Form 1099, from employers and payers. The dates for furnishing such information to recipients vary by form, but they are generally not required before February 1, 2022. You may need to allow additional time for mail delivery.
• Go to irs.gov to find the federal individual income tax returns, Form 1040, and Form 1040-SR (available for seniors born before January 2, 1957), and their instructions.
• File electronically and use direct deposit.
• Check irs.gov for the latest tax information, including how to reconcile advance payments of the child tax credit or claim a recovery rebate credit for missing stimulus payments. Also, watch for letters from the IRS with essential information about those payments that may help you file an accurate return.
Key filing dates
Here are several important dates to keep in mind.
• January 14. IRS Free File opened. Free File allows you to file your federal income tax return for free [if your adjusted gross income (AGI) is $73,000 or less] using tax preparation and filing software. You can use Free File Fillable Forms even if your AGI exceeds $73,000 (these forms were not available until January 24). You could file with an IRS Free File partner (tax returns could not be transmitted to the IRS before January 24). Tax software companies may have accepted tax filings in advance.
• January 24. IRS began accepting and processing individual tax returns.
• April 18. Deadline for filing 2021 tax returns (or requesting an extension) for most taxpayers.
• April 19. Deadline for filing 2021 tax returns (or requesting an extension) for taxpayers who live in Maine or Massachusetts.
• October 17. Deadline to file for those who requested an extension on their 2021 tax returns.
Awaiting processing of previous tax return?
The IRS is attempting to reduce the inventory of prior-year income tax returns that have not been fully processed due to pandemic-related delays. Taxpayers do not need to wait for their 2020 return to be fully processed to file their 2021 return.
Tax refunds
The IRS encourages taxpayers seeking a tax refund to file their tax return as soon as possible. The IRS anticipates most tax refunds being issued within 21 days of the IRS receiving a tax return if the return is filed electronically, any tax refund is delivered through direct deposit, and there are no issues with the tax return. To avoid delays in processing, the IRS encourages people to avoid paper tax returns whenever possible.
