Tax Return Alert: 5 Big Changes You Need to Know Before Filing

The IRS has implemented five important changes for the 2024 tax season that could significantly impact your tax return and potentially save you money. With the new tax season officially underway as of January 27, taxpayers are already submitting their federal returns for the 2024 tax year. The IRS anticipates processing over 140 million individual returns by the April 15 filing deadline. Last year, the average refund was $3,138.

Though no major changes were made by Congress, several important updates have been introduced that every filer should keep in mind.

1. Disaster Relief and Extended Deadlines

For taxpayers affected by natural disasters, the IRS is offering some flexibility. While most individuals must file their returns by the usual April 15 deadline, Los Angeles residents who were impacted by recent wildfires have been granted an extension. These taxpayers now have until October 15 to submit their returns and make payments, providing them extra time to recover from the devastation.

Additionally, those affected by qualifying disasters may be able to claim tax relief for the 2024 tax year or amend their 2023 returns. They no longer have to meet the typical requirement that personal casualty losses exceed 10% of their adjusted gross income. Taxpayers who qualify under this relief law may also be able to claim losses without needing to itemize their deductions. In some cases, individuals who suffered losses due to disasters as far back as 2020 might also be eligible for these benefits.

2. New Reporting Requirements for Online Sales

If you’ve sold products online in 2024, whether on platforms like PayPal, eBay, or similar services, your income may now be subject to new reporting rules. The threshold for receiving a 1099-K has dropped dramatically from $20,000 to $5,000. Even if you don’t receive a 1099-K, it’s important to remember that income from online sales must still be reported to the IRS.

3. Increased Security Measures for Taxpayers

The IRS is stepping up security measures to protect taxpayers’ personal information. Starting this year, more taxpayers will need to secure their tax accounts with a PIN. This enhanced security is part of a larger effort to protect your identity as more people are signing up for online accounts. The PIN is required to verify your identity when you file your tax return and will help safeguard your Social Security number from potential identity theft.

4. Electric Vehicle Tax Credit Reporting

If you purchased an electric vehicle (EV) and received a $7,500 tax credit, you’ll need to report the purchase to the IRS on your tax return. This ensures that you’re eligible for the credit, which could be reduced or lost entirely if your income exceeds certain limits. Be sure to report this information accurately to avoid complications with your refund.

5. Penalties for Underpayment of Taxes

More taxpayers are being penalized for underpayment of taxes, especially those with income not subject to withholding. According to the IRS, the number of taxpayers who received penalties for failing to make estimated tax payments increased by over 15% in 2023. Taxpayers who do not make the required estimated payments could face penalties and interest. If you want to avoid a 7% penalty, be sure to pay your estimates on time or adjust your withholding to reflect your income more accurately.

6. Free Tax Filing Options Expanding

For those looking for a more affordable way to file their taxes, the IRS has expanded its Direct File program. This free online service is now available in 25 states, up from 12 in previous years. More taxpayers in these states will be able to file their returns at no cost, including those claiming premium tax credits for marketplace health insurance.

The IRS continues to emphasize the importance of using a trusted tax professional when seeking help with your return, as scams and fraud are common during tax season.

Most refunds are expected to be issued within 21 days of filing.

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keelee-mccain

Keelee McCain is a junior at Weber High School. This is her second year on staff, this year as Assistant to the Chief. She does have a life (probably) but she can't think of anything to write in here, so she's probably just going to ramble now. She has an orange cat who she likes better than any human. If you see her being quiet or not sitting on top of a desk, there is something very wrong. In her free time she enjoys harassing her favorite teachers and sleeping. Her life plans include making it through high school and leaving. Happy lifeing.