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Tax Help in 2024

Moneyzine Editor
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Moneyzine Editor
5 mins
December 5th, 2023
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Tax Help in 2024

Assembling the required documentation ahead of time will minimize the effort it takes to fill out an income tax return. With the availability of electronic files and the help of sophisticated software tools, the process can be fast, secure, and comprehensive.

In this article, we're going to provide a stepwise approach to completing a federal tax return. The technique will follow along with the IRS Form 1040, and help taxpayers identify the information needed to complete each of the major sections found in an individual tax return.

Tax Preparation Help

Taxpayers have the ability to choose from several options to help prepare a federal income tax return. These options include: filling out the paper forms, using an e-file provider, or utilizing a tax preparation software package. These last two choices are extremely helpful in putting a return together in a fast and efficient manner; even better, they're sometimes offered for free.

e-file Help

Using one of the many IRS e-file providers to help prepare and file income tax returns electronically is a very popular choice today. The most difficult part of this process is figuring out which provider's service offers the best value.

In many instances, taxpayers will qualify for free preparation of their federal tax forms; although there is oftentimes a fee to e-file a state return. The "interview" technique these companies use has been perfected over the years. The entire process is fast, simple, and thorough.

Tax Preparation Software

Taxpayers that aren't comfortable using the assistance of an online provider can purchase tax preparation software and install it on their home computer.

Using the same interview techniques as the e-file providers, the tax preparation software can quickly determine which sections of the federal tax code apply to each individual. Once completed, the tax forms can be printed out and mailed, or filed with the IRS electronically.

Tax Paperwork Checklist

It's possible to speed things up by having the paperwork needed to complete these forms at the start of the process. The recommended checklist from the IRS includes:

  • W2 forms from all employers.

  • A 1090G, if a refund of state or local income taxes was received.

  • Any 1090 Form for dividends, income tax withholding, and other forms of income.

  • Receipts for any itemized deductions to be taken on Schedule A.

  • Records and receipts for any other income or expense that might impact a taxpayer's federal income tax liability.

  • Social Security numbers for all dependents.

  • Bank account numbers, if planning to get a refund or pay taxes due electronically.

Adjusted Gross Income

The first major milestone is Adjusted Gross Income: Line 36 on the Form 1040. Most taxpayers will know their tax filing status and be able to identify sources of income without the aid of software or a tax professional. However, once past the interest income associated with bank accounts, the tax law starts to get a bit more complex.

Help with Capital Gains

One of the more intricate tasks is the calculation of capital gains tax. The law changed several years ago, and the implications for long and short-term capital gains are more complicated than in the past. We put together some information aimed at supporting taxpayers in this area in our article: Capital Gains.

Following the American Taxpayer Relief Act of 2012, there are now three rates that apply to long-term capital gains. Individuals in the 10% and 15% federal income tax brackets pay 0% while those in the 39.6% bracket pay 20%; all other taxpayers owe 15%. Short-term capital gains are taxed at an individual's "normal" incremental tax rate.

Student Loans and IRAs

Some of the other stumbling blocks that might be encountered on the way to Line 36 are IRAs and student loans. In 2020 and 2021, taxpayers that qualify can deduct up to $2,500 in student loan interest, regardless of whether they itemize their deductions. This deduction is phased-out starting at $70,000 (in both 2020 and 2021) for single filers and $140,000 (in 2020 and 2021) for joint filers.

Our article on IRA rules can help individuals to figure out if they're eligible for an IRA contribution that is tax deductible or tax deferred

Taking Tax Deductions

For many taxpayers, the favorite part of a tax return deals with itemized deductions. Unless the standard deduction is taken, IRS Schedule A is used to calculate the total deduction permitted.

The types of allowable deductions include: Medical Expenses, Taxes and Interest Paid, Gifts to Charity, Casualty and Theft, Job and Miscellaneous expenses. Some of these costs need to exceed a threshold before a deduction can be taken, but that's all spelled out in the above articles.

Figuring Tax Credits

There are roughly four types of tax credits: Child Tax Credits (CTC), Dependent Care Credits, Earned Income, and Education. Our article Tax Credits outlines the rules that apply to each program, and can help individuals figure out if they're eligible to receive a credit.

Alternative Minimum Tax

Taxpayers making over $73,000 should run through IRS Form 6251 to make sure they are not subject to the alternative minimum tax. Once again, we have an entire article dedicated to this topic to help figure out if there is a way to minimize or avoid paying this tax.

Finding Tax Forms

Finally, we have a listing of over 100 tax forms that are indexed by the form number and the tax subject. This can help taxpayers to quickly locate any of the 1040 forms, or those dealing with specialized tax credits and expenses. We also have an article dedicated exclusively to IRS Form 1040 that helps to figure out if an individual can file a simple return with the 1040EZ, or they need to file the long form.

Additional Resources

  • Tax Return Preparation
    The majority of taxpayers prepare their own income tax returns, and that's the way it should be. After all, the IRS is supposed to ensure the average American understands how to complete a tax form. The Internet has made that process even simpler by providing direct access to tax preparation software programs. These applications walk a taxpayer through the process of preparing an income tax return.
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    While the single most important day of the tax season is April 15, there are a number of important dates to consider each year. A tax calendar is a handy reference document, which can help all taxpayers avoid both penalties as well as late fees.
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  • In this article, we'll continue the approach taken in the past, explaining the significant income tax changes in 2020. That discussion will include changes to Social Security and Medicare, federal income tax standard deductions and exemptions, mileage deduction rates, earned income credits, Hope and Lifetime Learning tax credits, in addition to changes to retirement accounts such as the 401(k), 403(b), IRAs, and Roth plans.
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  • Taxpayers that didn’t take advantage of the IRS e-file system last year are among a shrinking segment of Americans that still file paper copies of their federal tax forms. Anyone that reads this article has access to the Internet, and the ability to file electronically.
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  • Free File Federal Income Taxes
    Several years ago, the federal government extended its e-file service to include Free File Fillable Forms. This program allows taxpayers with access to a computer and the Internet to prepare and file their federal income tax returns. As was the case with earlier programs, electronic filing is both a fast and accurate way to securely file a return.
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