Navigating Tax Season 2024: What You Need to Know

By Ryan O’Donnell and Mike O’Donnell

Filing taxes can be a daunting task, especially considering the ever-changing landscape of the American tax code. As we approach the April 15 (or April 17 for Maine and Massachusetts residents) deadline, it's essential to stay informed about the latest updates and changes that may impact your tax return.

1. The IRS's New Direct File Program
   The IRS has introduced a new Direct File program, offering free electronic filing options for taxpayers with relatively simple tax situations. This service will be available in mid-March for residents in select states, providing a convenient way to file your taxes online. However, eligibility criteria apply, so be sure to check here to see if you qualify.

2. Electric Vehicle Tax Credits
   If you've recently purchased an electric vehicle, you may be eligible for tax credits of up to $7,500. However, the eligibility rules have tightened, requiring your income and the car price to fall below specific thresholds. Additionally, there are criteria regarding the vehicle's manufacturer, suggested retail price, and assembly location. Those criteria can be found on the US Department of Energys’s website.

3. Energy-Efficient Home Improvement Credits
   The Inflation Reduction Act has made tax breaks more generous for energy-efficient home improvements. Taxpayers can now claim up to $1,200 annually for certain improvements made through 2032. Additionally, credits are available for various new water heaters, heat pumps, and boilers, providing incentives for environmentally friendly upgrades.

4. Potential Changes to the Child Tax Credit
   While there may be potential midseason changes to the child tax credit, taxpayers are advised not to delay filing. Regardless of any adjustments, the IRS will be able to pay any refunds due retroactively, eliminating the need for amended returns.

5. Adjustments for Inflation
   The IRS has adjusted federal tax brackets and deductions to account for high inflation. This includes increases in income thresholds for various tax brackets and standard deductions, offering some relief to taxpayers amidst rising prices.

6. Reporting Cryptocurrency Transactions
   Taxpayers who have engaged in cryptocurrency transactions should ensure they accurately report their income. While brokerage firms may soon be required to report transactions on digital assets, taxpayers are responsible for reporting all income, regardless of whether they receive tax forms.

7. Retirement Account Changes
   A recent law allows retirees to delay making required minimum withdrawals from tax-advantaged retirement accounts until the age of 73. This adjustment offers retirees more flexibility in managing their finances as they transition into retirement.

As tax season unfolds, it's crucial to be aware of these changes and take advantage of any available deductions or credits. Whether you're filing electronically through the IRS's Direct File program or seeking guidance on tax credits for electric vehicles and home improvements, staying informed can help ensure a smooth and successful tax filing experience. Remember, the deadline is approaching, so don't wait until the last minute to file your taxes and maximize your potential refunds or credits.

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**This is intended for informational purposes only and should not be construed as tax advice. Taxpayers are encouraged to consult with a qualified tax professional to discuss their individual tax situation and ensure compliance with relevant tax laws and regulations.

1. https://www.irs.gov/about-irs/strategic-plan/direct-file

2. https://fueleconomy.gov/feg/tax2023.shtml

3. https://www.irs.gov/credits-deductions/home-energy-tax-credits

4. https://www.irs.gov/filing/federal-income-tax-rates-and-brackets

5. https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs