Tax Day 2024 is the deadline for filing your federal income tax return and paying any taxes you owe to the Internal Revenue Service (IRS). For most taxpayers, Tax Day is April 15th of each year, unless it falls on a weekend or a holiday. In that case, Tax Day is postponed to the next business day.
For the 2022 tax year, Tax Day is Saturday, April 15, 2024. However, because that date falls on a weekend, and the following Monday is Emancipation Day, a holiday observed in Washington, D.C., Tax Day is pushed back to Tuesday, April 18, 202412. This means that you have three extra days to file your tax return and pay your tax bill.
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Tax Day is important because it marks the final day to file your tax return and pay your taxes without incurring penalties and interest. If you fail to file your tax return or pay your taxes by the deadline, you may face a failure-to-file penalty of 5% of your unpaid taxes per month, up to a maximum of 25%. You may also face a failure-to-pay penalty of 0.5% of your unpaid taxes per month, up to a maximum of 25%. In addition, you will have to pay interest on your unpaid taxes, which is currently 4% per year3.
To avoid these consequences, you should file your tax return and pay your taxes on time. However, if you are unable to do so for some reason, you have some options to reduce or avoid the penalties and interest. Here are some tips on how to prepare for Tax Day 2023 and what to do if you need more time or assistance.
How to Prepare for Tax Day 2024
The best way to prepare for Tax Day 2024 is to start early and gather all the information and documents you need to file your tax return. Some of the things you may need include:
- Your personal information, such as your Social Security number or Individual Taxpayer Identification Number, your filing status, and your dependents’ information.
- Your income information, such as your W-2 forms from your employers, your 1099 forms from other sources of income, such as interest, dividends, retirement distributions, self-employment income, etc., and any other income statements or receipts.
- Your deduction and credit information, such as your mortgage interest statements, property tax bills, medical expenses receipts, charitable contributions receipts, education expenses receipts, child care expenses receipts, etc., and any other documents that support your deductions and credits.
- Your payment information, such as your bank account number and routing number if you want to pay electronically or receive a direct deposit refund.
Once you have all the information and documents you need, you can choose how to file your tax return. You have three main options:
- File electronically using IRS Free File or a commercial tax software program. This is the fastest and easiest way to file your tax return and get your refund. The IRS began accepting and processing electronic tax returns for the 2023 tax year on Jan. 23, 20244. You can track the status of your refund using the Where’s My Refund? tool on the IRS website or the IRS2Go mobile app.
- File by mail using IRS forms and instructions. This is the traditional way to file your tax return if you prefer paper forms. You can download the forms and instructions from the IRS website or order them by phone or mail. You will need to print and sign your tax return and mail it to the IRS along with any payment you owe. You can track the status of your refund using the Where’s My Refund? tool on the IRS website or the IRS2Go mobile app after six weeks of mailing your tax return.
- File with the help of a tax professional or a volunteer. This is an option if you need assistance with preparing and filing your tax return. You can find a qualified tax professional near you using the Find an Advisor tool provided by the CFA Institute or read this [article] by Investopedia on how to choose a good tax preparer. You can also find free basic tax preparation services from qualified volunteers through the Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs offered by the IRS.
What to Do If You Need More Time or Assistance
If you are unable to file your tax return or pay your taxes by Tax Day 2024 for some reason, you have some options to request more time or assistance from the IRS. Here are some of them:
- Request an extension: If you need more time to file your tax return, but not to pay your taxes, you can request an automatic six-month extension using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You can file this form online or by mail by April 18, 2024. This will extend your filing deadline to Oct. 16, 2024. However, this does not extend your payment deadline, so you will still have to pay at least 90% of your tax liability by April 18, 2024 to avoid the failure-to-pay penalty and interest.
- Apply for a payment plan: If you cannot pay your tax bill in full by the deadline, you can apply for a payment plan with the IRS to make monthly installments. You can apply online or by mail using Form 9465, Installment Agreement Request. You will have to pay a setup fee and interest on your unpaid balance, but you may qualify for a reduced fee or interest rate if you meet certain criteria. A payment plan can help you avoid or reduce the failure-to-pay penalty and interest.
- Request an offer in compromise: If you are unable to pay your tax bill in full or in installments, you may request an offer in compromise with the IRS to settle your tax debt for less than the full amount. You can apply online or by mail using Form 656, Offer in Compromise. You will have to provide detailed information about your income, expenses, assets, and liabilities, and pay a nonrefundable application fee and initial payment. The IRS will review your offer and accept it if it is reasonable and in the best interest of the government. An offer in compromise can help you resolve your tax debt and avoid further collection actions.
- Seek hardship relief: If you are facing financial hardship or other special circumstances that prevent you from paying your tax bill, you may seek hardship relief from the IRS. You can contact the IRS by phone or mail and explain your situation and request relief. The IRS may grant you relief such as temporarily delaying collection actions, waiving penalties and interest, or releasing a tax lien or levy on your property or income. Hardship relief is granted on a case-by-case basis and depends on your ability to pay and the impact of collection actions on your well-being.
How can I estimate my federal income tax liability?
To estimate your federal income tax liability, you need to calculate your taxable income and apply the appropriate tax rate for your filing status and income level. You can use the following steps to estimate your tax liability for the 2023 tax year1:
- Review your last year’s tax return and adjust it for any changes in your income, deductions, credits, or filing status.
- Add up all your sources of income, such as wages, interest, dividends, retirement distributions, self-employment income, etc. This is your gross income.
- Subtract any adjustments to income, such as contributions to a traditional IRA or a 401(k), alimony payments, student loan interest, etc. This is your adjusted gross income (AGI).
- Subtract either the standard deduction or the sum of your itemized deductions, whichever is higher. The standard deduction for 2023 is $12,950 for single filers, $18,800 for head of household filers, and $25,900 for married filing jointly filers2. Some of the common itemized deductions are mortgage interest, property taxes, medical expenses, charitable contributions, etc.
- Subtract any personal exemptions that you are eligible for. The personal exemption for 2023 is $4,300 per person2. You can claim one exemption for yourself, one for your spouse if filing jointly, and one for each dependent you have.
- This is your taxable income. Apply the tax rate that corresponds to your filing status and income level. The tax rates for 2023 are shown in the table below3:
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| Filing status | Taxable income bracket | Tax rate |
|---|---|---|
| Single | Up to $10,275 | 10% |
| Single | $10,276 to $40,950 | 15% |
| Single | $40,951 to $89,425 | 25% |
| Single | $89,426 to $193,850 | 28% |
| Single | $193,851 to $424,950 | 33% |
| Single | $424,951 to $480,050 | 35% |
| Single | Over $480,050 | 39.6% |
| Married filing jointly or qualifying widow(er) | Up to $20,550 | 10% |
| Married filing jointly or qualifying widow(er) | $20,551 to $81,900 | 15% |
| Married filing jointly or qualifying widow(er) | $81,901 to $178,850 | 25% |
| Married filing jointly or qualifying widow(er) | $178,851 to $387,700 | 28% |
| Married filing jointly or qualifying widow(er) | $387,701 to $849,900 | 33% |
| Married filing jointly or qualifying widow(er) | $849,901 to $960,100 | 35% |
| Married filing jointly or qualifying widow(er) | Over $960,100 | 39.6% |
| Married filing separately | Up to $10,275 | 10% |
| Married filing separately | $10,276 to $40,950 | 15% |
| Married filing separately | $40,951 to $89,425 | 25% |
| Married filing separately | $89,426 to $193,850 | 28% |
| Married filing separately | $193,851 to $424,950 | 33% |
| Married filing separately | $424,951 to $480,050 | 35% |
| Married filing separately | Over $480,050 | 39.6% |
| Head of household | Up to $13,600 | 10% |
| Head of household | $13,601 to $54,150 | 15% |
| Head of household | $54,151 to $119,500 | 25% |
| Head of household | $119,501 to $259.400 | 28% |
| Head of household | $259.401 to $559.900 | 33% |
| Head of household | Over $$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000$559.9000 |
- Multiply your taxable income by the tax rate to get your tax liability before credits.
- Subtract any credits that you are eligible for from your tax liability before credits. Some of the common credits are the child tax credit ($2,000 per child under 17), the earned income credit (up to $6,728 for low- to moderate-income workers), the American opportunity credit (up to $2,500 for qualified education expenses), the lifetime learning credit (up to $2,000 for qualified education expenses), etc.
- This is your tax liability after credits. Compare this amount with the amount of taxes that you have already paid or had withheld from your income. If your tax liability is more than your payments, you will owe the difference to the IRS. If your tax liability is less than your payments, you will get a refund from the IRS.
You can use online tools such as Tax Calculator to estimate your tax liability and refund based on your income and deductions. You can also use Form 1040-ES to calculate your estimated tax liability and make quarterly payments if you expect to owe more than $1,000 in taxes for the year.
Tax Day 2024 is Tuesday, April 18, 2024, which is the deadline for filing your federal income tax return and paying any taxes you owe to the IRS for the 2023 tax year. To prepare for Tax Day 2024, you should start early and gather all the information and documents you need to file your tax return. You can choose to file electronically, by mail, or with the help of a professional or a volunteer. If you need more time or assistance, you can request an extension, apply for a payment plan, request an offer in compromise, or seek hardship relief from the IRS. To learn more about Tax Day 2024, you can visit the IRS website or read this article by NerdWallet.
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