Income Tax News

TAX HELP: University of Holy Cross students and Entergy volunteers will offer free tax assistance to Entergy customers Feb. 24, 9 a.m.- 3 p.m., in the UHC Moreau Center, 4123 Woodland Drive in New Orleans. UHC’s free tax prep will continue every Saturday through April 6 (except March 9 and 30). www.uhcno.edu.

 

GUMBALAYA COOK-OFF: The St. Angela Merici Men’s Association will sponsor a cooking competition on Feb. 24, 4:30-9:30 p.m., at the school, 835 Melody Drive in Metairie. Tickets include gumbo, jambalaya/pastalaya and lagniappe tastings prepared by cooking krewes. Tickets are $20 adults; $10 children, with 5 and under free. www.stangelaschool.org/.

BOOK SALE: The Friends of Jefferson Public Library’s first warehouse sale will be held Feb. 24, 10 a.m.-4 p.m. at the East Bank Regional Library, 4747 W. Napoleon Ave. in Metairie. Purchase prepackaged boxes — children’s literature, romance or fiction (combination of hardback and paperback) — for $5 per box. Cash only; boxes sold sight unseen. Proceeds benefit the Jefferson Parish Library. FriendsJPL@yahoo.com or (504) 445-2665.

COOK-OFF FOR THE COAST: The event raising awareness about coastal restoration will be held Feb. 24, from 11 a.m.-3 p.m., at Docville Farm in St. Bernard Parish, 5124 E. St. Bernard Highway in Violet. Teams prepare dishes featuring wild game found in Louisiana’s coastal wetlands. Proceeds benefit the Chandeleur Sound Living Shoreline Program. coastcookoff.com.

PLANT SALE: City Park Conservancy will hold a plant sale March 1-3, 9 a.m.-noon, at the Pelican Greenhouse at City Park, 2 Celebration Drive in New Orleans. Plants start at $3. Availability lists are posted Tuesday before the sale. (504) 483-9437 plants@nocp.org.

ARTS MARKET: City Park Conservancy will hold its monthly arts market March 9, 10 a.m.-4 p.m., at the Goldring/Woldenberg Great Lawn at City Park, 8 Victory Ave. in New Orleans. The market features more than 30 local and Gulf South artists who showcase handmade works. artsneworleans.org.

BIG BASS FISHING RODEO: The 75th annual fishing rodeo, the oldest freshwater rodeo in the country, will be March 23 at 56 Dreyfous Drive in New Orleans City Park. Other activities include a fishing competition for grades 7-12; a competition for kayakers and nonmotorized vessels on Bayou St. John; and Fishtival, a free event with a DJ and more. Registration opens at 6:30 a.m., with the Fishtival 9 a.m.-noon. Tickets start at $10. neworleanscitypark.org.

ST. JOSEPH ALTARS

ARCHBISHOP CHAPELLE HIGH SCHOOL: Altar viewings will be from noon to 8 p.m. March 18-19 at the gymnasium, 8800 Veterans Memorial Blvd. in Metairie. An altar blessing will be held at noon March 18, and a rosary at 7 p.m. On March 19, Tupa Tupa will be at noon, with lunch following in the cafeteria. Viewings will be held 9 a.m.-4 p.m. www.archbishopchapelle.org.

CULTURE AND CONCERTS 

REMEMBER OUR HERITAGE: The St. Joseph Missionary Baptist Church Library Ministry, including the Westside Youth Choir and St. Joseph MBC’s Youth/Young Adult Choir, will perform the musical, “Our History in Song,” on Feb. 23, 7 p.m., at the church, 236 Robinson Ave. in Marrerro. www.stjosephbaptistchurch.org.

POPP UP MUSICAL STORYTIME: The Louisiana Philharmonic Orchestra series returns to Popp Bandstand at City Park, 54 Dreyfous Drive in New Orleans, on Feb. 24, 10:30-11 a.m., with cellist David Rosen. Free neworleanscitypark.org.

THE TRAIL THEY BLAZED: A traveling exhibit from The Historic New Orleans Collection will be on view through March 4 at the Blaine Kern Library at the University of Holy Cross Algiers campus, 4123 Woodland Drive in New Orleans. The exhibit features more than 40 quotes and sound bites from New Orleans and Lower 9th Ward participants in the local civil rights movement and highlights the 1963 march on City Hall. www.hnoc.org.

MUSICAL LOUISIANA: L’ARRIVEE: The Louisiana Philharmonic Orchestra will perform featuring the Ursuline Manuscripts and chamber ensembles Variant 6 and Filament, Feb. 28, 7:30 p.m., at St. Louis Cathedral, 615 Pere Antoine Alley in New Orleans. lpomusic.com.

NEW ORLEANS WOMEN IN MUSIC: The concert series, held each March during Women’s History Month and sponsored by the New Orleans Jazz & Heritage Foundation, will feature women performers at the George and Joyce Wein Jazz & Heritage Center, 1225 N. Rampart St. in New Orleans. Performers are Susan Cowsill, March 1; Mikayla Braun, March 2; Margie Perez, March 8; Dawn Richard, with Charm Taylor opening, March 9; Anna Moss, March 15; and Tarriona Ball Poetry, with Indys Blu opening, March 16. Doors open at 7 p.m.; concerts begin at 8 p.m. Tickets are $10; registration required. events.jazzandheritage.org.

ABOVE THE FOLD: “Above the Fold: The History of Newspapers in Louisiana” will be presented by The Historic New Orleans Collection, 520 Royal St. in New Orleans, on Feb. 24, 9 a.m.-5 p.m. Speakers will explore how the medium has evolved from the decades leading up to the Civil War to the present day. $25-$75 through Eventbrite. www.hnoc.org.

PRINCE HALL MASONS AND THE CIVIL RIGHTS MOVEMENT: The Amistad Research Center’s Conversations in Color series will kick off Feb. 24, 12:30-2 p.m., with a discussion between Kathe Hambrick, ARC executive director, and Ralph Slaughter, Most Worshipful Grand Master of the Louisiana Prince Hall Masons. Site is the ARC, Tilton Hall, Tulane University Reading Room, 6823 St. Charles Ave. in New Orleans. Free; register online tinyurl.com/ycywpp55.

TENNESSEE WILLIAMS: Alexandrea Weis, the award-winning author, screenwriter, and historian talks about her friendship with Tennessee Williams on Feb. 27, 7 p.m., at the East Bank Regional Library, 4747 W. Napoleon Ave., in Metairie. Co-sponsored by the Tennessee Williams/New Orleans Literary Festival. (504) 838-1100 or www.jefferson.lib.la.us.

AI AND THE FUTURE OF HISTORY: Margeaux Randolph will lead a discussion on leveraging AI to preserve historical documents, images and artifacts and to explore cultural heritage. Randolph is co-founder of Kr8 Ventures software development company. The event is Feb. 28, 5:30-7 p.m., at the ARC, Tilton Hall, Tulane University Reading Room, 6823 St. Charles Ave. in New Orleans. Free; register online at tinyurl.com/d6cpjejm.

BOOKS

 

BOOK ONE NEW ORLEANS: Mona Lisa Saloy, author of “Black Creole Chronicles,” will launch 2024 programming with a reading from her book on Feb. 22 at 6 p.m. in Room 407 of the Earl K. Long Library at UNO, 2000 Lakeshore Drive in New Orleans. onebookonenola.org

THE GUILD OF WIZARDRY & WHIMSY: The monthly fantasy book club will meet March 5 at Blue Cypress Books, 8123 Oak St. in New Orleans.  at 6:30-8:30 p.m. www.bluecypressbooks.com.

“THE COUNTERFEIT COUNTESS”: Author Elizabeth White and radio host Peter Ricchiuti will discuss her latest book, “The Counterfeit Countess: The Jewish Woman Who Rescued Thousands of Poles During the Holocaust,” on Feb. 21 at 6 p.m. at Blue Cypress Books, 8123 Oak St. in New Orleans. www.bluecypressbooks.com.

“THE AMERICAN DAUGHTERS”: Author Maurice Carlos Ruffin will discuss his newest novel and sign copies on Feb. 27, 6 p.m., at Baldwin & Co. Bookstore, 1030 Elysian Fields Ave. in New Orleans. Tickets for the event start at $32.50 through Eventbrite and include a copy of the book. www.baldwinandcobooks.com.

“TENNESEE WILLIAMS 101”: Author Augustin J. Correro will discuss his book Feb. 28 at 7 p.m., at the East Bank Regional Library, 4747 W. Napoleon Ave., in Metairie. Co-sponsored by the Tennessee Williams/New Orleans Literary Festival. (504) 838-1100 or www.jefferson.lib.la.us.

“FIRST LIE WINS”: Author Ashley Elston will discuss her book and its adaptation with Oscar-winning actress Octavia Spencer on Feb. 29, 6 p.m., at Garden District Book Shop, 2727 Prytania St. in New Orleans. RSVP encouraged. www.gardendistrictbookshop.com.

SCHOLARSHIPS

SBVFC SCHOLARSHIPS: The St. Bernard Chapter of the Louisiana Volunteers for Family and Community is accepting applications for its scholarship program through March 31. Four $1,000 scholarships will be awarded for the fall 2024 school year. A graduating senior attending any metro New Orleans high school, who is a resident of St. Bernard Parish and a U.S. citizen, is eligible. heartsy1@aol.com.

FUNDRAISERS/GALAS 

LARK IN THE PARK: City Park Conservancy’s fundraiser will be held March 8, 7-11 p.m., at the New Orleans Botanical Garden + Pavilion of the Two Sisters, 1 Victory Ave. in New Orleans. It features live music, food and specialty cocktails. VIP preview party at 7 p.m.; gala at 8 p.m. with music by Raw Deal. General admission tickets are $100, with 35 and under tickets $75. one.bidpal.net/lark/welcome

ST. BERNARD SPORTS HALL OF FAME: The induction and awards ceremony will be held March 9, 7 p.m., at the Frederick J. Sigur Civic Center, 8246 W. Judge Perez Drive in Chalmette. Guest speaker will be DD Breaux, former LSU women’s gymnastics coach. Tickets are $60 at shorturl.at/cruw5. Info at stbernardhalloffame@gmail.com.

WINE FETE: The fundraiser benefiting the Hermann-Grima + Gallier historic houses will be held March 22 in the French Quarter at Hermann-Grima House Courtyard, 820 St. Louis St. in New Orleans. The patron party is 6-7 p.m., and the main event is 7-10 p.m., with wine, live music, food, specialty cocktails and a silent auction. Tickets start at $125. hgghh.org.

CLASSES

TOUR GUIDE CLASS: Applications are being accepted for the Friends of the Cabildo Walking Tour Guide Class, set to begin Feb. 26. The 100-hour course on New Orleans history, public speaking skills, and the mechanics of leading a walking tour will train volunteer tour guides to staff FOC French Quarter walking tours. The four-week class meets 8:30 a.m.-3:30 p.m. on Mondays, Wednesdays, and Fridays. The cost of the course is $250. (504) 523-3939 or barbara@friendsofthecabildo.org.

AARP SMART DRIVER CLASS: The class will be Feb. 21, 5-9 p.m., at the Ochsner/Elmwood Fitness Center, 1200 S. Clearview Parkway in Harahan. This class is open to all age 50 and older. Those completing it will receive a certificate that may qualify them for a discount from their automobile insurer. Cost is $20 for AARP members, $25 nonmembers. (504) 828-3962.

MEETINGS

NARFE: The Vernon L. Landry Chapter 1398 of the National Active and Retired Federal Employees will hold its monthly luncheon March 13, beginning at 11 a.m., in the Sicilian Room at Rocky and Carlo’s Restaurant & Bar, 613 W. St. Bernard Highway in Chalmette. All active and retired federal and postal employees are invited. pamela.e.marks1953@gmail.com.

 

Originally Appeared Here

Make the Right Choice

The Internal Revenue Service today reminds taxpayers that carefully choosing a tax professional to prepare a tax return is vital to ensuring that their personal and financial information is safe, secure, and treated with care.

Most tax-return preparers provide honest, high-quality service. But some may cause harm through fraud, identity theft, and other scams. It is important for taxpayers to understand who they’re choosing and what important questions to ask when hiring an individual or firm to prepare their tax return.

Another reason to choose a tax preparer carefully is because taxpayers are ultimately legally responsible for all the information on their income tax return, regardless of who prepares it.

The IRS has put together a directory of federal tax-return preparers with credentials and select qualifications (irs.treasury.gov/rpo/rpo.jsf) to help individuals find a tax pro that meets high standards. There is also a page at irs.gov for choosing a tax professional that can help guide taxpayers in making a good choice, including selecting someone affiliated with a recognized national tax association. There are different kinds of tax professionals, and a taxpayer’s needs will help determine which kind of preparer is best for them.

 

Red Flags to Watch Out For

There are warning signs that can help steer taxpayers away from unscrupulous tax-return preparers. For instance, not signing a tax return is a red flag that a paid preparer is likely not to be trusted. They may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund.

These unscrupulous ‘ghost’ preparers often print the return and have the taxpayer sign and mail it to the IRS. For electronically filed returns, a ghost preparer will prepare the tax return but refuse to digitally sign it as the paid preparer. Taxpayers should avoid this type of unethical preparer.

In addition, taxpayers should always choose a tax professional with a valid preparer tax identification number (PTIN). By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid PTIN. Paid preparers must sign and include their PTIN on any tax return they prepare.

 

Other Tips

Here are a few other tips to consider when choosing a tax return preparer:

• Look for a preparer who’s available year-round. If questions come up about a tax return, taxpayers may need to contact the preparer after the filing season is over.

• Review the preparer’s history. Check the Better Business Bureau website for information about the preparer. Look for disciplinary actions and the license status for credentialed preparers. For CPAs, check the State Board of Accountancy’s website, and for attorneys, check with the State Bar Assoc. For enrolled agents, go to irs.gov and search for ‘verify enrolled agent status’ or check the IRS Directory of Federal Tax Return Preparers.

• Ask about service fees. Taxpayers should avoid tax-return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of the refund into their own financial accounts. Be wary of tax-return preparers who claim they can get larger refunds than their competitors.

• Find an authorized IRS e-file provider. They are qualified to prepare, transmit, and process electronically filed returns. The IRS issues most refunds in fewer than 21 days for taxpayers who file electronically and choose direct deposit.

• Provide records and receipts. Good preparers ask to see these documents. They’ll also ask questions to determine the client’s total income, deductions, tax credits, and other items. Do not hire a preparer who e-files a tax return using a pay stub instead of a Form W-2. This is against IRS e-file rules.

• Understand the preparer’s credentials and qualifications. Attorneys, CPAs, and enrolled agents can represent any client before the IRS in any situation. Annual Filing Season Program participants may represent taxpayers in limited situations if they prepared and signed the tax return.

• Never sign a blank or incomplete return. Taxpayers are responsible for filing a complete and correct tax return.

• Review the tax return before signing it. Be sure to ask questions if something is not clear or appears inaccurate. Any refund should go directly to the taxpayer — not into the preparer’s bank account. Review the routing and bank-account numbers on the completed return and make sure they are accurate.

• Taxpayers can report preparer misconduct to the IRS using Form 14157, Complaint: Tax Return Preparer (www.irs.gov/pub/irs-pdf/f14157.pdf). If a taxpayer suspects a tax-return preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit (www.irs.gov/pub/irs-pdf/f14157a.pdf).

 

Extended Hours

In addition to this advice, the IRS also announced nearly 250 IRS Taxpayer Assistance Centers around the country will extend their weekly office hours to give taxpayers additional time to get the help they need during the filing season. The extended office hours will continue through Tuesday, April 16.

The Springfield office, located at 1550 Main St., offers extended hours on Tuesdays and Thursdays. For questions about available services or hours of operation, call (413) 788-0284.

The expanded hours at the assistance centers reflect funding and staffing made possible under the Inflation Reduction Act, which is being used across the IRS to improve taxpayer service, add new technology and tools, as well as help tax-compliance efforts.

“This is another example of how additional IRS resources are helping taxpayers across the country,” IRS Commissioner Danny Werfel said. “Adding extra hours provide more options for hardworking taxpayers to get help with their tax issues. The IRS is continuing to work hard both during the upcoming tax season and throughout the year to find ways to make it easier for people to interact with us.”

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Originally Appeared Here

Stuart Wallace/Shutterstock / Stuart Wallace/Shutterstock

When 2025 draws to a close, so will many of the sweeping Trump-era GOP tax breaks established by the Tax Cuts and Jobs Act (TCJA) of 2017. While the legislation made some tax cuts to corporate profit permanent, lowered individual tax rates will expire on Dec. 31, 2025, and will revert to pre-TCJA levels.

See: This Is the One Type of Debt That ‘Terrifies’ Dave Ramsey
More: 6 Genius Things All Wealthy People Do With Their Money

Largely dependent on which party ends up running the White House and Congress after Inauguration Day 2025, changes to the tax code are coming. Whether cuts can be kept by Republicans, rates rewritten by Democrats or a divided government will agree on some sort of bipartisan compromise, taxpayers of every political persuasion will be affected.

In an editorial on RealClearPolitics, Julio Gonzalez, CEO and Founder of Engineered Tax Services, Inc., warns of a “harsh reality” facing Congress.

“We are in a situation in which many American families and businesses are hanging on by a thread. Letting the non-permanent provisions of the TCJA expire could be catastrophic to our overall economy and the well-being of many working families,” stated Gonzalez.

The TCJA spawned a bunch of changes to the tax code, but here are three key tax adjustments that you’ll need to consider before they turn back at the end of 2025.

Income Tax Rates

Although it kept seven income brackets, the TCJA lowered tax rates across the board and restructured bracket spans, making them more agreeable under the TCJA. With the exception of those who were at 10% (those making $11,000 or less) and 35% (those earning $231,251 to $578,125) tax rate levels prior to 2018, all income tax rates decreased when the new laws came into effect.

The top individual tax rate dropped from 39.6% to 37% under the terms of the Tax Cuts and Jobs Act (single filers making $578,126 and over), the 33% bracket fell to 32% ($182,101-$231,250), the 28% bracket to 24% ($95,376-$182,100), the 25% bracket to 22% ($44,726-$95,375) and the 15% bracket to 12% ($11,001-$44,725).

Story continues

These bracket backslides will mean that every American will need to reassess their spending and tax returns to pay 1% to 4% more in personal taxes unless provisions are extended, revised or made permanent over the next 28 months.

Standard Deduction

Under the Tax Cuts and Jobs Act for the tax years beginning after December 31, 2017, and before January 1, 2026, the standard deduction was nearly doubled for all filing statuses. This led to fewer people itemizing deductions and instead opting for the standard deduction.

The TCJA significantly changed the standard deduction amounts for individuals and families. The standard deductions before the 2017 Tax Year were $6,350 for single filers, $9,350 for heads of household and $12,700 for those married filing jointly.

After the TCJA (2018-2025 tax years), these amounts jumped dramatically. The standard deductions for the 2023 tax year are $13,850 for those single or married filing separately, $27,700 for those married filing separately and surviving spouses and $20,800 for heads of household.

This change aimed to simplify the tax filing process for many individuals and families (Forbes estimates that 90% of taxpayers choose to claim the standard deduction). Claiming the standard deduction made it possible for many to skip the complicated process of itemizing deductions and potentially reduce taxable income.

Estate Tax Exemptions

American taxpayers with considerable estates benefit from larger exemptions, and because this tax can have a significant effect on your beneficiaries, it’s best to plan ahead for it in your estate plan if you think your estate may trigger it.

Discover: Top 7 Countries with Zero Income Tax
Also: IRS Increases Gift and Estate Tax Exempt Limits — Here’s How Much You Can Give Without Paying

The TCJA doubled the estate and gift tax exemption for individuals, from $5.49 million in 2017 to $11.18 million in 2018. Adjusted for inflation, the exemption was $12.06 million in 2022 and it increased to $12.92 million in 2023. This means that an individual can now pass on up to $12.92 million in assets without being subject to federal estate or gift taxes. For married couples, this effectively allows a combined exemption of $25.84 million.

More From GOBankingRates

This article originally appeared on GOBankingRates.com: Trump Era Tax Cuts Are Set To Expire — Here’s How Much More You’ll Pay

Originally Appeared Here

Tax season officially began on Jan. 29, 2024, when the IRS began accepting federal income tax returns for tax year 2023. 

In 2023, the agency processed more than 163 million returns and issued more than 105 million refunds. (The average refund amount? Close to $3,200.) 

While many people wait until closer to the filing deadline to send in their returns, it’s always a good idea to get your paperwork together early in case there are any issues.

Here are the dates you need to know for tax season 2024, including federal and state filing deadlines, as well as when you can expect your refund. 

The deadline for most taxpayers to file a federal tax return is Monday, April 15, 2024.

Because of the observances of Patriot’s Day (April 15) and Emancipation Day (April 16), taxpayers living in Maine and Massachusetts have until Wednesday, April 17, 2024, to file. 

Many parts of the U.S. have been impacted by severe weather: Residents and businesses in parts of Connecticut, Maine, Rhode Island and West Virginia that have been declared disaster areas by the Federal Emergency Management Agency (FEMA) have until June 17, 2024, to file their federal returns.

A full list of federally designated disaster sites is available on the FEMA website.

For the most part, state taxes are also due on April 15, 2024.

The following states have different deadlines:

• Massachusetts: April 17, 2024
• Maine: April 17, 2024
• Hawaii: April 22, 2024
• New Mexico: April 30, 2024 (only for e-returns)
• Oklahoma: April 20, 2024 (only for e-returns)
• Delaware: April 30, 2024
• Iowa: April 30, 2024
• Virginia: May 1, 2024
• Louisiana: May 15, 2024

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming do not collect income taxes.

For the most current information, consult with your state’s Department of Revenue.

If you filed your federal return electronically and are due a refund, the IRS says you can generally expect it within 21 days. (Enrolling in direct deposit will help you get your money faster, too.)

If there is an issue with your return or if you filed a paper return, it may take longer.

One of the easiest and fastest ways to get your refund is with an online tax-filing program: TurboTax’s basic edition accepts Form 1040 and limited tax credits, and the company claims 37% of filers are eligible to use it for free.

If you need to itemize your deductions, you can pay for TurboTax Deluxe Online for federal returns and state filing. It will also crosscheck over 350 deductions and credits to see if you qualify.

TurboTax

• Cost

  Costs may vary depending on the plan selected – click “Learn More” for details

• Free version

• Mobile app

• Live support

  Available with some pricing and filing options

Click here for TurboTax offer details and disclosures. Terms apply.

H&R Block’s free online edition is also suited for simple returns, though it will process unemployment compensation and retirement income. If you need to itemize your deductions or report self-employment taxes, you’ll want the paid deluxe edition, which comes with help from both live experts and H&R Block’s AI tax assistant.

A Refund Advance Loan from H&R Block can make up to $3,500 available the same day you file, with no loan fees or interest. 

H&R Block

• Cost

  Costs may vary depending on the plan selected (Free Online, Deluxe, Premium, or Self-Employed) – click “Learn More” for details

• Free version

  Yes (for simple returns only)

• Mobile app

• Live support

  Available with some pricing and filing options

The deadline to file a tax extension is April 15, 2024. You will then have until Oct. 15, 2024, to file your return but, you still need to make an estimated payment on April 15. According to the IRS, “an extension of time to file your return does not grant you any extension of time to pay your taxes.” 

To request an extension, you can submit an online or paper version of IRS Form 4868. You can also submit some or all of the money you owe and indicate it’s for an extension.

Each state has its own process for requesting a tax extension. Many, including California and Illinois, offer an automatic six-month extension for their state returns.

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The deadline for most taxpayers to file federal and state income taxes is April 15, 2024. although there are some exceptions. If you are expecting to receive a refund and file electronically, your money should arrive within 21 days.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every tax article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of tax products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

Originally Appeared Here

In 2021, Americans owed about $625 billion in taxes that they never paid. This number, called the “tax gap,” represented some 13.7 percent of all taxes due, and, had it been collected, it would have reduced the deficit by nearly one-quarter.

Getting more of that number collected is naturally an obsession of many tax and budget experts. It represents a way to fund government programs without raising taxes, adding to the deficit, or making other cuts. Deals like that can feel as rare as unicorns in the tax world. Funding the IRS in an effort to reduce the tax gap was one of the key ways Democrats funded their climate subsidies in the Inflation Reduction Act (IRA) of 2022.

The question is what share of that $625 billion could be realistically recovered. Even a perfectly resourced Internal Revenue Service would, after all, miss some tax evasion and misreporting. The Congressional Budget Office estimated that the IRS funding in the IRA would raise an average of $20.3 billion a year over 10 years, a small fraction of the $625 billion gap. For years, though, some economists have been vocally arguing that better enforcement could raise much, much more than that.

A new report released by the Treasury Department on Tuesday argues that those economists had a point, that we have been understating the revenue this new IRS funding will bring in. They argue that it will bring in over $170 billion more than they previously thought over an 11-year window and that, if Congress extends this funding for the IRS, the ultimate revenue gain could be more than double initial estimates.

The takeaway is that investing in the IRS could, if this study is accurate, be a better deal than we thought.

Why Treasury thinks it underestimated revenue from IRS funding

The increased revenue projected comes from a few different sources. One of the biggest is that Treasury is finding that marginal audits in recent years have been bringing in more money than anticipated. They had assumed that additional audits would bring in less and less revenue, on the grounds that the most profitable audits are already taking place — the low-hanging fruit has been plucked, in other words.

But the new report argues this isn’t as true as they had assumed. Recent IRS examinations, it writes, have shown “much greater revenue potential than is reflected in previous estimates of the impact of marginal work.”

The report also incorporates money the IRS anticipates getting due to “specific deterrence.” That’s a fancy term for a simple idea: If you audit a taxpayer in one year, they are less likely to hide income from the IRS in the next few years because now they are more worried about getting caught. This finding is based on a study released last year by economists Will Boning, Nathaniel Hendren, Ben Sprung-Keyser, and Ellen Stuart. While Boning is at the Treasury Department, the rest are independent academic researchers. The academic paper estimated the “returns” on spending on IRS audits: How much money does $1 spent on audits yield in new revenue?

The finding was that this spending pays for itself many times over and that the return is higher the wealthier the audited person is. Audits of low-income taxpayers bring in $5 for each $1 spent, while audits of high-income taxpayers bring in $12 per $1 spent. Much of that return, they find, comes from deterrence causing audited individuals to report more money in ensuing years. The Treasury paper takes the Boning et al paper’s estimates of increased revenue from deterrence and uses them to adjust upward Treasury’s previous estimates of how much revenue the audits funded by the IRA money will raise directly.

Finally, Treasury assumes that investment in better taxpayer services (like shorter wait times for calls, simpler reporting methods, and nudges/reminders to pay estimated taxes) and in better IT systems will result in still further revenue increases.

Prior to this paper, Treasury estimated that over the 11 years from 2024-2034, and if extended past 2029 when the IRA funding is due to run out, a fully funded IRS would bring in $390.3 billion in revenue directly from audits.

• $497 billion in revenue once you add in the specific deterrence and greater efficiency effects
• $851 billion once you include better IT and taxpayer services.

That final number is more than double the initial $390.3 billion estimate.

Should we believe this?

The methodology of the Treasury report is straightforward, and the Boning et al. research is from very respected, careful researchers who I find credible. But it’s always worth being a little skeptical of releases like this. For one thing, the Treasury oversees the IRS, and so is effectively putting out research arguing that it and its subsidiary institutions should get more money. They may very well be right, but they’re hardly a disinterested party.

Secondly, the difference between even the initial $390.3 billion estimate of revenue from Treasury and the CBO’s $203.7 billion estimate gives me a little pause. The difference between the CBO estimate and the massive $851 billion number gives me still more (though, in fairness, the CBO is not modeling the IT and other effects in the Treasury paper). Some of the discrepancy is explained by the former being an 11-year estimate and the latter being a 10-year one; another difference is the CBO estimate starts in 2022, not 2024, so the Treasury number will naturally be a little bigger because of inflation in those two years.

But there’s still a big gap after adjusting for those factors. In latter years, Treasury is projecting much more revenue, even before these new deterrent effects, than CBO did. In 2031, for instance, CBO estimates $35.3 billion in new revenue from the IRS funding, while Treasury’s prior estimate was $57.1 billion, before all the increases it’s implementing now. The baseline Treasury estimate that year being over 60 percent higher than that of Congress’s impartial budget arbiter raises some red flags for me. A Treasury official explained that the CBO assumes lower returns on audits than Treasury has, and that this disagreement predates the new report. But that still doesn’t mean Treasury has the correct side of that argument.

All that said, the core idea of the report — that deterrence effects mean that increased numbers of audits could greatly increase revenue from funding the IRS — seems sound. It’s particularly relevant because the cost of the clean energy subsidies in the Inflation Reduction Act appears to be much higher than estimated when the bill was based: about 65 percent higher, per the Joint Committee on Taxation (JCT, the CBO’s partner that estimates tax provisions).

That’s largely due to more people and businesses wanting to invest in clean energy than initially estimated. For instance, the JCT has increased its estimate of what the US will spend subsidizing electric cars by more than fivefold because of surging demand for the cars. If you like these subsidies, this is a good thing: They’re doing their job and driving demand up.

But it raises the question of whether these provisions will actually be paid for by the revenue provisions of the Inflation Reduction Act. The new Treasury report is, in effect, an argument that the IRS funding could be up to the challenge of paying for all this unexpected clean energy spending.

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Dear Savvy Senior,
What are the IRS income tax filing requirements for retirees this tax season? I didn’t file a tax return the past two years because my income was below the filing threshold, but I got a part-time job late last year, so I’m wondering if I’m required to file this year.
Retired Worker  

Dear Retired,

Whether or not you are required to file a federal income tax return this year will depend on how much you earned last year (in 2023), as well as the source of the income, your age and filing status.

Here’s a rundown of this tax season’s IRS tax filing requirement thresholds.

For most people, this is pretty straightforward. If your 2023 gross income – which includes all taxable income, not counting your Social Security benefits, unless you are married and filing separately – was below the threshold for your filing status and age, you probably won’t have to file. But if it’s over, you will.

• Single: $13,850 ($15,700 if you’re 65 or older by Jan. 1, 2023).
• Married filing jointly: $27,700 ($29,200 if you or your spouse is 65 or older; or $30,700 if you’re both over 65).
• Married filing separately: $5 at any age.
• Head of household: $20,800 ($22,650 if 65 or older).
• Qualifying surviving spouse: $27,700 ($29,200 if 65 or older).

To get a detailed breakdown on federal filing requirements, along with information on taxable and nontaxable income, call the IRS at (800) 829-3676 and ask them to mail you a free copy of the “1040 and 1040-SR Instructions for Tax Year 2023,” or you can see it online at IRS.gov/pub/irs-pdf/i1040gi.pdf.

Check Here Too

Be aware that there are other financial situations that can require you to file a tax return, even if your gross income falls below the IRS filing requirements. For example, if you earned more than $400 from self-employment in 2023, owe any taxes on an IRA, Health Savings Account or an alternative minimum tax, or get premium tax credits because you, your spouse or a dependent is enrolled in a Health Insurance Marketplace plan, you’ll need to file.

You’ll also need to file if you’re receiving Social Security benefits, and one-half of your benefits plus your other gross income and any tax-exempt interest exceeds $25,000, or $32,000 if you’re married and filing jointly.

To figure all this out, the IRS offers an online tax tool that asks a series of questions that will help you determine if you’re required to file, or if you should file because you’re due a refund. It takes less than 15 minutes to complete.

You can access this tool at IRS.gov/Help/ITA – click on “Do I Need to File a Tax Return?”  Or, you can get assistance over the phone by calling the IRS helpline at (800) 829-1040.

Check Your State

Even if you’re not required to file a federal tax return this year, don’t assume that you’re also excused from filing state income taxes. The rules for your state might be very different. Check with your state tax agency before concluding that you’re entirely in the clear. For links to state tax agencies, see Taxadmin.org/fta-members.

Tax Preparation Help

If you find that you do need to file a tax return this year, you can free file through the IRS at IRS.gov/FreeFile if your 2023 adjusted gross income was below $79,000.

Or, if you need some help, contact the Tax Counseling for the Elderly (or TCE) program. Sponsored by the IRS, TCE provides free tax preparation and counseling to middle and low-income taxpayers, age 60 and older. Call (800) 906-9887 or visit IRS.treasury.gov/freetaxprep to locate services near you.

You can also get tax preparation assistance through the AARP Foundation Tax-Aide service. Call (888) 227-7669 or visit AARP.org/findtaxhelp for more information. You don’t have to be an AARP member to use this service.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.

Originally Appeared Here

As a tax professor, I love taxes: the theory, the policy, even the politics. But I have a confession to make. I hate doing them. My taxes are not complicated. Yet, every year, I spend hour upon hour gathering documents, paying for tax preparation software, entering in my income, and puzzling through the instructions as I try to figure out whether I am eligible for this or that deduction or credit. Every year, I think to myself: There has got to be a better way!

And there could be, so long as politicians got out of the way and let the IRS work directly with the American people. By that, I’m referring to a 2024 pilot program that would allow a large number of taxpayers to file directly with the IRS. It’s a huge deal! But like most things associated with taxes, it is complicated.

Those of us of a certain age remember receiving a thick booklet from the IRS each year filled with forms and instructions. If you needed a rare form not included in the booklet, you had to go down to the post office to see whether they had one. For those who didn’t get to experience this joy, all I can say is: Be skeptical of those promoting the good old days. Some things may be simply too painful to remember.

With the rise of the personal computer, companies like Intuit developed tax preparation software to help people do their own taxes, saving them the need to hire an accountant. The computer would walk you through all the steps, but you still had to print out the returns and mail them in. Don’t forget to attach your W-2 and 1099-Rs! The parties at the post office, as the deadline approached, were epic.

Eventually, as technology advanced, Congress and the IRS figured out that “e-filing” was the future. The information contained in a paper return could be squirted over a modem as a series of 0’s and 1’s, obviating the need to kill trees and race to the post office. The IRS would no longer have to receive and process millions of physical returns. It was a true win-win. But how to get people to file electronically? This is where it gets interesting.

Lizzie O’Leary

TurboTax’s Fight Against Free Tax Filing

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Simply put, the IRS wasn’t up to the task of developing its own free online system, so it joined forces with commercial tax preparation software companies to create a free filing option for those with income under a certain amount (in 2022, $73,000). In return for the companies agreeing to provide free filing for around 60 percent of all taxpayers, the IRS agreed not to develop its own product. The program has been modified over the years, but it is currently on its last legs. Even at its peak in 2005, only 6.4 percent of eligible taxpayers took advantage of the program. Over the past few years, Intuit and H&R Block, which handled 70 percent of the free-filing volume, have withdrawn from it entirely. Suffice it to say, this effort has failed.

We won’t discuss the issues with tax preparation companies diverting customers who could have filed for free to fee-paying services, except to say that such abuses led to changes in the program that now allow the IRS to develop its own direct-file program. The Inflation Reduction Act, passed in 2022, included funds for the IRS to study the question, and the IRS issued a long-awaited report in May. The report determined that taxpayers are interested in an IRS-developed filing option, but it acknowledged uncertainties regarding the costs and how many people would actually decide to use it.

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The net result is a pilot project for the 2024 filing season (the 2023 tax year) that will be rolling out in 12 states, eight of which have no state income tax (Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming) and four of which that do (Arizona, California, Massachusetts, and New York). Not everyone in those states will be eligible to participate in the pilot, but the IRS estimates that up to 20 million taxpayers are eligible. The ultimate goal would be expand the number of eligible taxpayers and to integrate federal and state filing into a simple, one-stop website.

It should come as no surprise that tax prep companies view this as a threat to their business model. Nor should it surprise anyone that they are taking steps to undermine the effort, ranging from deploying lobbyists in D.C. to insinuating through well-placed op-eds that a government-sponsored direct-file option will hurt the very people it was designed to help, particularly in diverse communities. I would not be surprised to discover that the tax prep companies were behind recent Republican efforts to cut IRS funding.

Doing your taxes will never be fun, but it could be cheaper and easier. If you live in one of the states participating in the pilot, I encourage you to check out the direct-file option to see whether you can participate. If the tax prep companies can build a better mousetrap that people are willing to pay for, God bless them. But we have an opportunity to help government work better for all of us. Let’s not pass it up.

Originally Appeared Here

A recent report named Minnesota’s tax code the most progressive in the U.S., meaning that Minnesota’s state and local tax system does more to reduce income inequality than that of any other state in the country.

The upshot of the new report — “Who Pays?”  from the left-leaning Institute on Taxation and Economic Policy — is that low-income Minnesotans pay less in taxes (including income, sales, property, and excise taxes) than their counterparts in most other states, while high earners pay more. But because most states have steeply regressive tax codes — meaning lower earners pay a larger share of their income than the rich — the reality is that Minnesota state and local effective tax rates (total taxes divided by income) are fairly flat across income groups, especially outside of the lowest 20%. The chart below shows effective tax rates for Minnesota, South Dakota and Wisconsin for each income quintile, with the highest 20% broken out into subgroups.

South Dakota and Wisconsin’s effective tax rates for lower-income households are similar to Minnesota’s middle-income rates, but fall steeply at the top. This is the hallmark of a regressive tax code, and the same holds true for other low-tax states like Florida and Texas. 

For Minnesota, the ranking of most progressive tax code is an achievement several decades in the making, resulting from policies like a graduated income tax as well as a number of credit and refund programs targeted at lower-income households. Most recently, a new child tax credit and a surtax on investment income of very high earners — combined with corporate tax cuts in other states — vaulted Minnesota to the top spot. 

The ranking was lauded by economic fairness advocates both here and across the country, who praised Minnesota for reducing inequality by ensuring the rich pay a larger share of their income in taxes than the poor. They are right to celebrate: A progressive tax code follows the egalitarian values of the Minnesota Miracle; it helps those in need, and it asks more from those whom society has benefited most. Those are all good things that Minnesotans should be proud of.

But when it comes to taxes, there is danger in focusing too much on the question of “who pays?” over “what do they pay for?” 

Once raised, state and local tax dollars fund an enormous and often under-appreciated range of public investments that support our daily lives, shape the character of our communities, and set the fundamental terms of our social contract. This encompasses not just the public programs we have now, but the things that we might want in the future. 

For example, Evan Ramstad recently published an excellent column in the Star Tribune  discussing America’s shameful under-investment in child care compared to European countries. As Ramstad points out, these sorts of investments are could be established here. But they require a different conversation around taxes.

Namely: Taxes are good. They pay for things that benefit us all, and so it’s right that everyone contribute. Taxes can fund basic necessities like affordable child care, health care, college, and greater housing supply, as well as quality-of-life amenities like parks, libraries and the arts. 

These are inherently public goods that we can neither afford to buy as individuals, nor effectively distribute through private markets. Case in point: the overpriced, understaffed child care system described in Ramstad’s column and many other places. As Ramstad points out, solutions to these problems exist in other places and they are attainable here. But it requires a more tax-positive approach.

Asking Minnesotans to embrace higher taxes will be no small feat, but it is especially necessary in the United States, which raises and spends less money on public goods and services than any other developed nation of comparable wealth. 

Measured as a share of total economic output, U.S. taxes are about 20% lower than the OECD average, and 35% lower than countries like Sweden, Finland, and Denmark, which are renowned for low levels of poverty and crime, excellent health outcomes, and a generally high quality of life.

For Americans, the lack of public investment means higher out-of-pocket costs for health care, child care and college. More broadly, the fragile social safety net means a more precarious life, without the guarantee of income support, basic housing, or medical care in the event of calamity. These would seem like far more pressing (and politically inspiring) questions than whether a middle-earner spends 8.6% (the South Dakota average), 10% (the Minnesota average), or 10.5% (the U.S. average) on state and local taxes.

Right now, many national tax policy advocates are focused on tax fairness and the idea that only “the rich” should pay for additional public spending. This is understandable given current levels of inequality. But an overwhelming progressivity may come at the expense of the revenues we could raise to fund collective investments in a better society.

Minnesota has long carved its own path to becoming the state that works, with the strongest economy in the region and some of the highest quality of life in the country. Our policymakers should continue looking for opportunities to build on that success by easing barriers to attaining life’s basic necessities.

Relying too much on progressive taxation will greatly limit the state’s funding options, given that 13 out of 15 state tax revenue sources are considered regressive by the technical definition. Higher incomes are also more volatile, which is a problem for states that need to balance every budget. And, although its effects are often overstated, there is also the perennial threat of rich taxpayers leaving. 

That’s not to say that Minnesota shouldn’t raise taxes on the rich. But it would be a mistake to accept progressivity as the litmus test of a worthwhile revenue source.

For decades, Minnesota has been a pioneer in funding a more just society. Now that we have the most progressive tax code in the country, the fiscal conversation in Minnesota should pivot to: “What can we get for it?”

Originally Appeared Here

The Internal Revenue Service has no right to force 750,000 Arizona families who got a state income tax rebate last year to now pay federal taxes on the funds, Attorney General Kris Mayes said Thursday.

She said if the agency doesn’t back off — and soon — she may sue. Arizonans need answers before the April 15 deadline to file their federal returns, Mayes said.

There was no immediate response from the IRS.

In a four-page letter to Commissioner Daniel Werfel, Mayes said the agency is treating Arizonans differently than residents of other states that issued similar rebates. She dismissed IRS arguments that Arizona’s situation is legally distinguishable from those in other states.

Hanging in the balance is how much, if anything, Arizona families will owe the U.S. government out of the tax rebate the state made through paper checks and automatic deposits into their bank accounts last year.

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The rebate came about because under a budget deal approved by the Republican-controlled Legislature and Democratic Gov. Katie Hobbs, part of a state surplus was used to create a $260 million pool to provide a rebate. The rebate was of $250 for any child younger than 17 and $100 for older dependents, with a maximum of $750 per family.

The IRS threw a damper on that by notifying the Arizona Department of Revenue that the funds were taxable and that the state must inform the federal agency how much each family got. That, in turn, requires Arizonans to report the proceeds when they file their federal income tax returns, or run the risk of getting an unwelcome notice in the mail that their filing does not match federal records.

How much Arizonans would owe if the IRS does not back off depends on how much they earn.

There are seven tax brackets, ranging from 10% for individuals with a federally adjusted gross income of up to $11,000 — or double that for married couples filing jointly — to 37% for those making $578,126 or more.

So, everything else being equal, someone getting a $500 rebate who is in the 22% bracket — from $44,726 to $95,375 for individuals — would be required to give back $110 to Uncle Sam.

Mayes’ arguments

Mayes, in her letter to Werfel, said his agency’s determination the rebates are taxable is contrary to IRS policy.

She cited a notice published by the agency that said payments made to individuals by the government under “legislatively provided social benefit programs for the promotion of the general welfare’’ need not be included in the recipient’s federal gross income, the starting point for computing taxes owed.

The attorney general said she wants a response from Werfel by Feb. 6.

“If we are not able to satisfactorily resolve this issue by then, I will consider all possible avenues for potential legal action on behalf of the state and its taxpayers in advance of this year’s filing deadline,’’ she wrote.

None of this affects what rebate recipients owe the state. The legislation enacting the rebate spells out that any amounts received are not subject to state income taxes.

Some of Mayes’ arguments are technical, getting into the fact that the rebates were not available to all Arizonans but only those who met the specified conditions.

But she also told Werfel the IRS previously concluded that rebate proceeds from programs in other states were not taxable.

“These programs were generally indistinguishable from Arizona’s rebate except insofar as they were less restrictive,’’ Mayes said.

Consider, she said, the “Colorado Cash Back’’ program, a 2022 law that gave residents there a $750 rebate for individuals and $1,500 for married couples filing jointly. Mayes said the IRS is not making recipients pay federal taxes on those dollars.

Ditto, she said, for California’s “Middle Class Tax Refund,’’ which was generally available to all residents who fell within the program’s income range and could not be claimed as dependents. For example, a married couple making up to $150,000 a year with dependents would get an estimated $1,050 payment.

But much of what Mayes is saying falls into some highly technical areas of tax law and how the IRS interprets the code.

For example, some involves a question of whether the rebate should be taxable if it does not exceed the taxes actually paid and if that person did not itemize and deduct those state taxes from his or her federal tax return. Mayes said making everyone pay is “inequitable and arbitrary.’’

“It is inequitable because approximately 75% of Arizonans who received a tax rebate payment had a tax liability in excess of the rebate amount,’’ she said. Mayes cited figures saying Arizonans who claimed a rebate had an average tax liability of about $1,700 for the year the rebate was claimed against an average rebate amount of $370.

She said taxing that is “in violation of the IRS’ own criteria.’’

“And many more Arizonans will be federally taxed on the entire rebate, even though they paid at least some state taxes in an eligible year,’’ Mayes said.

Get your morning recap of today’s local news and read the full stories here: tucne.ws/morning

Howard Fischer is a veteran journalist who has been reporting since 1970 and covering state politics and the Legislature since 1982. Follow him on X, formerly known as Twitter, and Threads at @azcapmedia or email azcapmedia@gmail.com.

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Originally Appeared Here

Early birds who love to snag those big income tax refunds will want to know that the Internal Revenue will begin accepting and processing individual income tax returns as of Jan. 29.

And for lower- to middle-income working families in Michigan, state income tax refunds could end up substantially higher under some key changes for one tax credit.

The Michigan Department of Treasury said the official start date of the 2024 tax season will be Jan. 29, as well.

Three big changes hit Michigan income tax returns

A major state income tax overhaul in Michigan was signed into law earlier in 2023 by Gov. Gretchen Whitmer, including benefits for families who may be living paycheck to paycheck as they work lower-wage jobs.

Across the board, state residents will benefit from a temporary, lower income tax rate. The flat income tax rate on state of Michigan returns was 4.25% in 2022. And it will be down to 4.05% in 2023. So you should owe slightly less state income taxes or receive a bigger refund, if you had the same amount of income in 2023 as 2022.

Everyone will be buzzing about the state’s working families credit

Some 700,000 households in Michigan will benefit from a far more generous Michigan earned income tax credit for working families. The credit jumps from 6% in 2021 to 30% in 2022, 2023 and 2024.

The maximum credit in Michigan is $2,229 for 2023. And taxpayers will benefit retroactively, as well, since the maximum credit was boosted to $2,080 for 2022.

Those who qualified for the state credit and already filed a 2022 Michigan income tax return will receive an extra check in the coming weeks to make up the difference of what they received last year and the amount they would be owed under the expanded credit.

On Feb. 13, the Michigan Treasury will start rolling out these extra supplemental checks based on 2022 returns. People will see the money at different times, as checks will be sent over a five-to-six-week timeframe to eligible taxpayers. The checks will provide eligible taxpayers with the remaining 24% portion of their Michigan ETIC for the 2022 tax year.

Don’t expect that money to arrive on the spot in February; some eligible taxpayers might not receive a check until later in March.

The average extra refund for the 2022 qualifying Michigan returns is expected to be $550.

Checks are being sent to families who claimed the Michigan earned income tax credit for working families on their 2022 state return and qualified for the federal earned income tax credit for the 2022 tax year. Some families, though, might not qualify for additional money, depending on their income and other factors.

The Michigan Treasury Department said taxpayers should not amend their 2022 state income tax return based on the new higher credit to receive any money owed. The state Treasury will help qualified filers receive the full credit owed for 2022.

Paper checks covering what’s owed for 2022 will be mailed to the most recent address that the Treasury has on file. But someone who has moved between tax filings can update their address. See Michigan.gov/taxes/questions.

Matt Hetherwick, chief program officer for the nonprofit Accounting Aid Society in Detroit, said people who qualify for the EITC but did not file a 2022 state income tax return can still do so. But they will need to file a 2022 return before April 18, 2025, to get the full EITC from both their federal and state tax returns.

“It’s important that tax filers are aware of the tax credit and that they are filing their tax returns to receive the tax credits they are entitled to,” Hetherwick said.

Accounting Aid Society sites are now open. Tax filers can visit www.accountingaidsociety.org or call 313-556-1920 to schedule their no-cost tax prep appointment. No-cost tax preparation services are available for households making less than $64,000 a year.

Michigan’s tax on pensions

The third change, and perhaps the most confusing for 2023 state income returns, involves a retirement tax rollback.

Many retirees who live in Michigan will be looking at extra work this tax season to figure out if they can get a better break on their state income tax returns under the new rules.

Some might not be looking at much or any of a state tax break on their pension income when they file their 2023 returns this year. The big savings associated with the move to “repeal the retirement tax” will be down the road for many retirees as new, more accommodating limits gradually phase into place.

One significant shift now: Beginning in 2023, the new state law exempts pension income for public police officers and firefighters, county correction officers, and state troopers and sergeants from the Michigan state income tax.

The big winners in 2023 would be those retirees, including police and fire, who get the exemption right away. Others are looking at a more phased-in approach over a few years that will require running their individual numbers.

Retirees still can opt to deduct their pension and retirement income on Michigan state income tax returns, just as they did in 2022 using old rules, which reflect when you were born. Or they can select to use new rules when addressing any taxes owed on their retirement income. Again, run the numbers to see what is best for you.

A contrived, age-based system went into place in 2012 after Republican Gov. Rick Snyder successfully pushed through a controversial plan in Lansing to tax the pension and 401(k) incomes of millions of retirees. Now, it’s going to take some time and a lot of patience to unpack and unravel.

Don’t file until you know your numbers are correct

Employers are required to mail wage statements for 2023 — the W-2 and 1099 — to their employees by Jan. 31. You want that document.

Tax experts warn that filing a tax return based on your pay stub from the end of the year isn’t wise because the end-of-year stub typically doesn’t reflect all taxable income received for a calendar year.

If you’re in a rush, it’s OK to get other paperwork ready and double check your numbers when you get that W-2. Some employers do give online access to your W-2.

Take care with your tax return

Everyone is looking to save money, including on what they pay for tax preparation services. But dealing with a bad job on a tax return isn’t like trying to outgrow a bad haircut. Huge financial headaches, including ID theft, can be triggered if you’re dealing with bogus advice or an unscrupulous tax preparer.

“If you’re in the market for a new tax preparer, take care and do your homework,” said Luis D. Garcia, an IRS spokesperson in Detroit.

“It’s usually the only time when you give a stranger all this sensitive personal information for yourself and your family,” he said.

Check out someone’s credentials. Garcia suggests that you research a preparer through the Better Business Bureau and the IRS Directory of Preparers. You can use the IRS directory to determine the type of credentials or qualifications held by a specific tax professional. All tax return preparers are not in the IRS directory.

Garcia advised that you never sign a tax return if the tax preparer hasn’t signed it first along with their Preparer Tax Identification Number.

Don’t grab the next hot tax tip off social media, either. The IRS warns that “social media can circulate inaccurate or misleading tax information, and the IRS has recently seen several examples.”

One popular scam last tax season involved encouraging people to wrongly file an obscure form called “Form 8944,” which is a request by a tax preparer for a hardship waiver and applies to a very limited group. Such schemes encourage people to submit false information to boost their refund.

When’s the tax deadline?

Federal tax returns based on your 2023 income will be due by April 15 — which is a Monday. The tax deadline for state of Michigan income tax returns is April 15, too.

What’s the standard deduction?

Many taxpayers do not itemize deductions because the standard deduction is now fairly high. The standard deduction is somewhat higher on 2023 federal income tax returns after an inflation adjustment.

For married couples filing jointly, the standard deduction is $27,700 on federal returns.

For single filers and married couples filing separately, the 2023 standard deduction is $13,850 on federal returns.

And the standard deduction is $20,800 for head of household, tax filers who are generally unmarried with one or more qualifying dependents.

What’s the mileage deduction?

On federal returns, some people itemize and need to take into account a mileage deduction. Unfortunately, if you work for an employer, not for yourself, you can no longer deduct unreimbursed mileage driven for work.

The optional mileage rate for 2023 is 65.5 cents a gallon for self-employed and business travel. Self-employed individuals can claim business mileage on their tax returns. Those filing 2023 returns in 2024 need to use the 2023 mileage rate. The rules can be complicated, so take time to understand them.

The mileage rate for business use on 2023 returns is one rate, a shift back to a more normal pattern. On 2022 returns, tax filers were given two sets of mileage rates after the rapid climb in prices at the pump.

The mileage rate for 2023 is 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces.

The mileage rate used when driving in service of charitable organizations remains at 14 cents. This rate is set by statute and remains unchanged.

How long does it take to get a tax refund?

Most taxpayers didn’t see the widespread headaches with lengthy delays for their federal income tax refunds in 2023 as they did earlier during the pandemic.

The average federal income tax refund in 2023 was $3,167 based on IRS data through Dec. 29, down 2.6% from the same period in 2022. The total number of refunds was down 4.4%.

But nearly 500,000 people nationwide who were victims of ID theft were still waiting on their refunds as they still had cases pending with the IRS’s Identity Theft Victims Assistance unit at the end of 2023. They found themselves waiting an average of 19 months for the IRS to resolve their problems, according to the National Taxpayer Advocate 2023 Annual Report to Congress.

Lengthy delays hit many who filed an amended return. Unprocessed amended returns stood at 1.9 million as of late October 2023, according to the report.

In general, it can take up to 21 days to receive a federal income tax refund via direct deposit. But often refunds for e-filed returns are issued in less time than that.

A key exception: Taxpayers claiming the earned income tax credit or the additional child tax credit on their federal returns aren’t able to get a refund before mid-February by law. The IRS must delay issuing those refunds in order to avoid fraudulent claims early in the season.

Early filers can expect to see most refunds related to the earned income tax credit or the additional child tax credit to be in bank accounts or on debit cards by Feb. 27 under key conditions. The Feb. 27 date depends on whether the tax filer electronically files the tax return, chooses direct deposit, and the IRS has no other issues with the return, the IRS said.

The IRS is promising that some new improvements will help taxpayers who turn to the “Where’s My Refund” tool at IRS.gov. Taxpayers should see more detailed refund status messages, including whether the IRS needs the taxpayer to respond to a letter requesting additional information.

Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X (Twitter) @tompor.

Originally Appeared Here