Income Tax Preparation for 2024 Tax Returns:
Tax season can be overwhelming, but with the right preparation, filing your 2024 tax return doesn’t have to be a stressful experience. Understanding the necessary steps to take and the available tools can help streamline the process. This guide will walk you through essential tips for preparing your 2024 income tax return. Then consider our Firm as your income tax preparer.
1. Start Early and Gather All Necessary Documents
The first step in preparing your 2024 tax return is to gather all required documents. This can include W-2 forms from employers, 1099 forms for freelance or contract work, receipts for deductible expenses, and proof of other income. Having everything in one place ensures you won’t miss anything, and it will speed up the filing process. A checklist can be helpful to track these documents, which may include:
- W-2 forms for your salary or wages
- 1099 forms for other income (self-employment, interest, dividends)
- Proof of deductible expenses (student loan interest, mortgage interest, medical expenses)
- Last year’s tax return, especially if you’re claiming dependents or qualifying for credits
The IRS typically starts accepting tax returns in January, so it’s wise to begin preparing as soon as you receive your documents, which might take until late January or early February.
2. Understand the Tax Changes for 2024
Each year, the IRS updates tax laws, and 2024 brings some notable changes. Understanding these changes will help you take advantage of new deductions or credits, as well as avoid common mistakes. Some of the key updates for 2024 include:
- Standard Deduction Adjustments: The IRS increases the standard deduction to account for inflation. For 2024, the standard deduction is $27,700 for individuals, $55,400 for married couples filing jointly, and $20,800 for heads of household.
- Child Tax Credit: The credit for children under 17 is again available in 2024, with eligibility based on income. It is important to understand who qualifies and what income limits apply.
- Retirement Savings Contributions: Contributions to retirement accounts such as IRAs and 401(k)s can reduce your taxable income. The 2024 contribution limits have increased for several retirement accounts, so maximizing contributions can lower your taxable income.
Staying up-to-date on these changes ensures you don’t overlook potential savings or tax breaks.
3. Review Potential Deductions and Credits
Maximizing your deductions and credits is crucial in lowering your tax liability. The tax code offers numerous opportunities for deductions, including but not limited to:
- Mortgage Interest: You can deduct mortgage interest if you itemize deductions, which can be particularly useful for homeowners.
- Medical Expenses: If your medical expenses exceed 7.5% of your adjusted gross income (AGI), you may deduct them.
- Education Credits: The American Opportunity Credit and Lifetime Learning Credit can reduce your taxes if you or your dependents incur higher education expenses.
Tax credits directly reduce your tax bill, and taking advantage of all available credits can lower the amount you owe. You may qualify for credits such as the Earned Income Tax Credit (EITC) or the Child and Dependent Care Credit.
4. Don’t Overlook Self-Employment Taxes
If you’re self-employed, make sure to account for both income tax and self-employment taxes. The IRS requires self-employed individuals to pay both the employee and employer portions of Social Security and Medicare taxes. Self-employed workers can deduct business-related expenses, such as office supplies, travel, and equipment, to lower their taxable income.
A good income tax preparer can help with this as well.
5. Income Tax Preparer Near You
If your tax situation is complicated, or if you feel uncertain about filing your taxes, consider hiring a tax professional. Certified Public Accountants (CPAs) or enrolled agents can help you navigate tax laws, find deductions and credits you may miss, and ensure compliance with tax laws.
When choosing a tax preparer, look for someone with experience in your specific situation, whether you’re a business owner, have significant investments, or are dealing with unique tax issues.
Conclusion
Preparing for your 2024 tax return doesn’t have to be intimidating. By starting early, gathering your documents, and understanding the latest tax changes, you can make the process smoother. Whether you decide to use tax software, hire a professional, or do it yourself, staying organized and informed ensures you maximize your tax savings. Taking the time to properly prepare for tax season can save you money and prevent costly mistakes.
Call Schultz CPA today and receive a quote and schedule an appointment. 734-354-2380
Or Email vtran@schultz-cpa.com and she will reply with a quote and schedule your appointment.