How to get ahead this tax season

Tax season kicks off later this month, but experts say it’s not too early to get organized and get ahead. Read on for strategies you can start now and potential changes to watch as you prepare your 2024 federal income tax return.

BLUEPRINT TO GET ORGANIZED

“If you are a perpetual procrastinator, like myself, now would be a really good time to start to get organized,” said Monika Hengesbach, an enrolled agent and founder of Decision Financial.

Hengesbach said you can start by looking at last year’s return. You can log into your IRS.gov online account or create one if you haven’t already to see recent tax records.

“When we start to get tax forms, I always like my clients to pull up their transcripts through their ID.ME account just to make sure that we're not missing any forms, particularly if we've moved the past year,” Hengesbach said.

People can use an online account to request an IRS identity protection pin and check the status of a refund later.

The IRS’ Free File program isn’t open yet for the season. However, you may have access to software you can use now. If so, Duke Alexander Moore, an enrolled agent and founder of Duke Tax said, “If you have a software that is already allowing you to prepare a tax return, plug those numbers in.”

Moore said this gives you a chance to plan for a tax bill due by April 15.

“You can see if you're getting a refund, you can see if you owe taxes,” said Moore. “In the event you owe taxes, you have one, two, three, four months to start preparing and budgeting for those taxes.”

CLEAN VEHICLE CREDIT, INCOME REPORTING

Moore points out that tax filers shouldn’t overlook key tax credits. For example, a clean vehicle tax credit can also apply to some used cars. There are income caps to qualify and specific vehicles listed here are eligible.

“You had the opportunity to take this credit at the dealership for the first time so it can actually knock down the price of your car, maybe save on the interest payments. Now, if you chose not to take it at the dealership, you can still take it on your tax return,” Moore explained.

For the 2024 tax year, payment apps and online marketplaces are required to send you form 1099-K which reports payments you received for goods or services over $5,000. The IRS writes that this may apply to a personal item you sold, gig worker income or from selling things you made.

The IRS says taxpayers will continue to see questions on their return about crypto, NFTs and other digital assets.

“If you do digital assets, you really want to make sure that you are noting those answers in the tax return,” said Hengesbach. “This is an extremely hot topic with the Internal Revenue Service and has been in the past couple of years.”

The IRS typically starts accepting returns for the latest tax year - later in January. After that, spokesperson Clay Sanford said taxpayers who file electronically and authorize direct deposit will see the quickest refunds.

“If there's nothing wrong with your tax return and you use e-file plus direct deposit, you can expect to refund in 21 days or less generally,” Sanford said.

The exception is filers who claim the earned income tax credit, or EITC, or additional child tax credit, also known as the ACTC. The IRS said, by law, it can’t release those refunds until after mid-February.

You can find more tips about getting started on your taxes from the IRS here.

PREPARE YOUR OWN TAXES FOR FREE

The IRS offers Free File for people with annual adjusted gross incomes of $79,000 or less. Filers can pick a third-party software program that guide you through your return by asking you questions. It helps filers determine what credits and deductions apply and then calculate what you owe or your refund. As of January 2, IRS Free File has not opened yet for the current tax season. The IRS says to continue to check back this January.

People who make too much to use IRS Free File can still prepare their taxes with IRS Free File Fillable Forms. It helps with basic calculations, though it doesn’t offer the same level of step-by-step instructions as tax-guided software offered via IRS Free File.

If you don’t have a computer or laptop at home, you can use your phone to download the IRS2Go app. When you open the app, look at the menu at the bottom and click on the “free tax help” option to find Free File.

Last year, we told you the IRS was piloting a Direct File program, allowing certain taxpayers in some states to prepare and file their returns for free directly with the IRS. According to its website, IRS Direct File will be back when the tax filing season opens in 2025. Texas is listed as a participating state.

Direct File may not be an option for some tax situations. It works with certain types of income, contributions to specific retirement plans and only supports common credits. For example, if you have income from gig work, take distributions from an IRA or plan to itemize deductions, Direct File says it can’t support those calculations.

FREE IN-PERSON TAX PREP

Some tax filers qualify for free in-person tax preparation services through the IRS’s Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs. Generally, people who make $67,000 or less, people with disabilities, and limited English speakers qualify for free tax help through the VITA program. The TCE program can help many filers who are 60 years and older. The IRS says TCE sites specialize in questions about pensions and retirement-related issues.

You can search for local sites here. Type in your zip code and use the drop-down menu to select how far you’re willing to travel, between 5 to 100 miles. Click on each provider’s service details to find hours of operation and whether you would need an appointment. Note: The site currently has a few North Texas locations, but the tax season hasn’t begun yet. The website says the locator is updated regularly from February through April.

The AARP Foundation Tax-Aide focuses on taxpayers over 50 years old with low-to-moderate income. The Tax-Aide locator is expected to be open by mid-January 2025. You can check back here to find a site that can help in North Texas.

Some veterans and members of the military can check out MilTax for free tax return help with no income limit. MilTax’s website says its free software will be available January 15, 2025.

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