2024 tax filing season set for January 29; IRS continues to make improvements to help taxpayers

IR-2024-04, Jan. 8, 2024

WASHINGTON — The Internal Revenue Service today announced Monday, Jan. 29, 2024, as the official start date of the nation’s 2024 tax season when the agency will begin accepting and processing 2023 tax returns.

The IRS expects more than 128.7 million individual tax returns to be filed by the April 15, 2024, tax deadline.

Although the IRS will not officially begin accepting and processing tax returns until Jan. 29, people do not need to wait until then to work on their taxes if they’re using software companies or tax professionals. For example, most software companies accept electronic submissions and then hold them until the IRS is ready to begin processing later this month. IRS Free File will also be available on IRS.gov starting Jan. 12 in advance of the filing season opening. The IRS Direct File pilot will be rolled out in phases as final testing is completed and is expected to be widely available in mid-March to eligible taxpayers in the participating states.

IRS Scam Alerts!

Thousands of people have lost millions of dollars and their personal information to tax scams. Scammers use the regular mail, telephone and email to set up individuals, businesses, payroll and tax professionals.

The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. Know the telltale signs of a scam and how to know if it’s really the IRS.

IRS Offers Guidance on 100% Business Tax Deduction for Food and Beverages

The Treasury Department and the Internal Revenue Service have issued Notice 2021-25 providing guidance under the Taxpayer Certainty and Disaster Relief Act of 2020. The Act added a temporary exception to the 50% limit on the amount that businesses may deduct for food or beverages. The temporary exception allows a 100% deduction for food or beverages from restaurants.

Reasonable compensation of S Corporation Shareholders

As a reminder, the IRS requires all S Corporation shareholders to take “reasonable compensation”.  After the 2nd year of operations of your S Corporation, if the IRS challenges that reasonable compensation was not paid & reported on quarterly payroll returns and an annual W-2, they will reclassify 100% of shareholder distributions as wages.

Reasonable salary needs to be related to services performed.  If there are other employees working in the S Corporation and business would continue with very little involvement from the owner, an argument could be raised for a lower salary to the shareholder.

What is a deductible medical expense?

If you itemize your deductions for a taxable year on Schedule A (Form 1040 or 1040-SR), Itemized Deductions PDF, you may be able to deduct expenses you paid that year for medical and dental care for yourself, your spouse, and your dependents. You may deduct only the amount of your total medical expenses that exceed 7.5% of your adjusted gross income. You figure the amount you’re allowed to deduct on Schedule A (Form 1040 or 1040-SR).

Tax checklist for newly married couples

Marriage changes a lot of things and taxes are on that list. Newlyweds should know how saying “I do” can affect their tax situation.

Here’s a checklist of items for newly married couples to review:

Read more

Steps to Take Now to Get a Jump on Next Year’s Taxes

Tax planning is for everyone. Get ready today to file your federal income tax return next year. How to making necessary adjustments to withholding, gather records, renew expiring tax identification numbers and more.

Here’s Five Reasons to Use Direct Deposit for a Tax Refund

As taxpayers prepare for the start of filing season, they should consider a direct deposit of any refunds due. It’s easy, safe, fast — and the best way to get a refund. That’s why 80 percent of taxpayers choose it every year. IRS Direct Deposit: Is Fast. The quickest way for taxpayers to get their refund is to electronically file their federal tax return and use direct deposit. They can use IRS Free File to prepare and e-file federal returns for free.  Taxpayers who file a paper return can also use direct deposit. Is Secure. Since refunds go right into a bank account, there’s no risk of having a paper check stolen or lost. This is the same electronic transfer system that deposits nearly 98 percent of all Social Security and Veterans Affairs benefits into millions of accounts. Is Easy.  Choosing direct deposit is easy. With e-file, just follow the instructions in the tax software. For paper returns, the tax form instructions serve as a guide. Make sure to enter the correct bank account and routing number. Has Options. Taxpayers can split a refund into several financial accounts. These include checking, savings, health, education and certain retirement accounts. Use IRS Form 8888, Allocation of Refund (including Savings Bond Purchases), to deposit a refund in up to three accounts. Do not use this form to designate part of a refund to pay tax preparers. Taxpayers should deposit refunds into accounts in their own name, their spouse’s name or both. Avoid making a deposit into accounts owned by others. Some banks require both spouses’ names on the account to deposit a tax refund from a joint return. Taxpayers should check with their bank for direct deposit rules. There is a limit of three electronic direct deposit refunds made into a single financial account or pre-paid debit card. The IRS will send a notice and a refund check in the mail to taxpayers who exceed the limit. Additional IRS Resources: Publication 17, Your Federal Income Tax Where’s My Refund? Frequently Asked Questions about Splitting Federal Income Tax Refunds Share this tip on social media — #IRSTaxTip: Here’s Five Reasons to Use Direct Deposit for a Tax Refund.  https://go.usa.gov/xnp8Q

1099 REPORTING REQUIREMENTS FOR SMALL BUSINESS CLIENTS

We would like to take this opportunity to remind you that every business must file informational returns (Federal Form 1099) with the IRS for certain payments made during the calendar year. On or before January 31, 2017, you must file Form 1099-MISC for each person (including partnerships and limited liability companies and excluding corporations) to whom you paid the following: Read more

IRS Warns of Pervasive Telephone Scam

WASHINGTON — The Internal Revenue Service today warned consumers about a sophisticated phone scam targeting taxpayers, including recent immigrants, throughout the country.

Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting. Read more

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