(LEX 18) — As you prepare for the 2024 tax season, the IRS and Optimum Financial Services are offering their tips and best practices.
The start of tax season is already bringing more than a hundred filers through the doors of Optimum Financial Services.
The anticipation of filing in hopes of a big refund is pretty standard. Still, preparer Courtney Hooper says inflation and financial strain also impact the desire for refunds this year.
"The price of everything has gone up... rent, housing," said Hooper.
Optimum says they typically see 1,200 filers a season. The IRS is anticipating 146 individual filers nationwide.
The average refund for Kentuckians who filed their 2022 federal income tax was $3,229. It was higher than the national average of $3,167, but that national average was down 2.6% from what we saw the year before.
This year, IRS spokesperson Stacy Engle says they expect refunds to be the same or better.
"The standard deduction went up, and filing tax brackets were changed, which means you could earn more money and stay in a lesser tax bracket, which affects the amount of the refund. So, I do believe filers this year will see a little more money in their refunds," said Engle.
Instead of looking at how big your refund is, Hooper suggests filers change their perspectives.
As long as you don't owe any money, she says getting a smaller refund means you didn't give an interest-free loan to the federal government and kept your money in your pockets.
Hooper says those who started a side hustle or a business in 2023, like many Americans looking to make extra money but didn't pay taxes on income throughout the year, can expect to owe the government some money.
However, there is a positive for parents of children. You could see a bigger refund this year depending on the result of a bill going through Congress.
"We are encouraging out clients to just wait," said Hooper."It is a potential to raise your child tax credit to put more money inside of your home."
There are also energy tax credits filers can utilize.
If you are paying someone to file for you, Hooper suggests filers use someone with the appropriate education and have the correct documents.
They also provide these free tools that could also help.
Engle also shared an IRS Checklist:
1. Gather all necessary tax paperwork and records for accuracy to avoid missing a deduction or credit. Taxpayers should have all their important and necessary documents before preparing their return. This will help file a complete and accurate tax return. Errors and omissions slow down tax processing, including refund times.
Before beginning, taxpayers should have:
- Social Security numbers for everyone listed on the tax return.
- Bank account and routing numbers.
- Various tax forms such as W-2s, 1099s, 1098s, and other income documents or records of digital asset transactions.
- Form 1095-A, Health Insurance Marketplace statement.
- Any IRS letters citing an amount received for a certain tax deduction or credit.
2. Remember to report all types of income on the tax return. This is important to avoid receiving a notice or a bill from the IRS. Don't forget to include income from:
- Goods created and sold on online platforms.
- Investment income.
- Part-time or seasonal work.
- Self-employment or other business activities.
- Services provided through mobile apps.
3. Filing electronically with direct deposit is the fastest way to receive a refund. Avoid paper returns. Tax software helps individuals avoid mistakes by doing the math. It guides people through each section of their tax return using a question-and-answer format.
For those waiting for their 2022 tax return to be processed, here's a special tip to ensure the IRS accepts their 2023 tax return for processing. Enter $0 (zero dollars) for last year's adjusted gross income (AGI) on the 2023 tax return. Everyone else should enter their prior year's AGI from last year's return.
4. Free resources are available to help eligible taxpayers file online. Free help may also be available to qualified taxpayers. IRS Free File provides a free online alternative to filing a paper tax return. IRS Free File is available to any individual or family who earned $79,000 or less in 2023.
With IRS Free File, leading tax software providers make their online products available for free as part of a 21-year partnership with the IRS. This year, there are eight products in English and one in Spanish. Taxpayers must access these products [apps.irs.gov] through the IRS website.
People who make over $79,000 can use the IRS' Free File Fillable Forms. These are the electronic versions of IRS paper forms. This product is best for people who are comfortable preparing their own taxes.
Qualified taxpayers can also find free one-on-one tax preparation help nationwide through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.
5. Consider which filing option to use; each one has its own benefits. Taxpayers should decide based on their personal situation and comfort level with tax preparation.
- Personally file taxes.
- Use online filing services.
- Hire a tax professional. Choose a tax professional carefully. Most tax return preparers are professional and honest and provide excellent client service. However, dishonest tax return preparers who file false income tax returns exist. The IRS has a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications [irs.treasury.gov] and more on choosing a tax pro on IRS.gov.
6. Don't wait on hold when calling the IRS. Use online resources at IRS.gov to get answers to tax questions, check refund status, or pay taxes. No wait time or appointment is needed — online tools and resources are available 24 hours a day. The IRS' Interactive Tax Assistant tool and Let Us Help You resources are beneficial.
