Tax season, a period often met with mixed feelings, is upon us once more. As of January 23, 2024, the IRS has opened its doors to accept 2023 tax returns, with the filing deadline set for Monday, April 15, 2024. To navigate this tax season with minimal stress, it's crucial to be proactive as your 2023 documents start arriving.
Here are three key strategies to ensure a smoother tax filing experience:
1. Prioritize Timely Filing—Regardless of Payment Ability
A common pitfall is the failure to file tax returns due to the inability to pay owed taxes. This mistake leads to unnecessary financial penalties, including both "Failure to File" and "Failure to Pay" fees, compounding the financial burden. Filing by the deadline ensures you're only facing one penalty at most and facilitates smoother communication with the IRS. An example of correspondence might be: "Taxpayer respectfully requests [insert request] on their original and timely filed 2023 Form 1040." Save yourself from additional costs and complications by filing on time, payment considerations aside.
2. Seize Opportunities to Reduce Your 2023 Tax Liability
Even after the year has ended, there are still avenues to lower your tax bill. Contributions to a traditional Individual Retirement Account (IRA) can be tax-deductible for 2023, allowing for a potential "write-off" and immediate tax relief. The deadline for such contributions is April 15, 2024, with a maximum of $6,500 ($7,500 for those 50 and above). Alternatively, contributing to a Health Savings Account (HSA) can also offer a direct tax benefit. Eligible individuals can contribute up to $3,850 for self-only coverage or $7,750 for family coverage, with an additional $1,000 catch-up contribution for those 55 and older. Before proceeding, consult with a financial advisor to ensure eligibility and make informed decisions about these accounts.
3. Explore Free Tax Filing Options
For households earning below $79,000 annually, free tax filing options are available. Two methods to consider include:
- Accessing guided tax preparation software through the IRS Free File program.
- For those near Polk County preferring in-person assistance, United Way of Central Florida offers free tax preparation services. Contact them at 211 or visit https://uwcf.org/free-tax-prep-2024/ for more details.
By keeping these tips in mind—filing punctually, leveraging tax-saving accounts, and utilizing free filing resources—you can alleviate some of the season's stress and possibly save money. If you're uncertain about how to proceed or need personalized advice, our team at CPS is here to help. Reach out to us at Info@CPSInvest.com for guidance tailored to your situation. Here's to a more manageable tax season!
