Looking Ahead to 2024 Tax Season

We speak with Mark Steber, Chief Tax Information Officer at Jackson Hewitt about what happens if you missed the tax deadline and how to better prepare for next year’s tax season. Steber also shares the biggest tax trends this year.

What should we do now that tax season is over?

Now would be a good time to determine how this past tax year went for you. Did you experience refund shock? Balance due trauma? Other? To adjust next tax season’s outcome, think about updating your withholding or changing your estimated tax payments and adjust for other life changes.

What happens if consumers missed the tax deadline? What do people need to understand about an extension?

If you opted for an extension, make sure you get your return done and filed as soon as you can. Especially if you’re uncertain if you owe or not because regardless, an extension is just for more time to file, but not to pay. So, why wait?

If you missed the deadline, then time is of the essence to prevent the possibility of taxes, penalties, interest and even clean-up fees from a tax pro to fix it all. Bottom line: don’t panic and get help as soon as possible.

What are the IRS penalties for paying late?

Failure to File is 5% of the current balance due and applies when you don’t file your tax return by the due date and monthly until you do file.

Failure to Pay is 0.5% of the current balance due and applies when you don’t pay the tax you owe by the due date and monthly until you do pay.

Other penalties include failure to pay in the right way and other accuracy penalties. The IRS also charges interest and the current rate and compounds daily.

If filed on time, what should consumers do with their tax return?

Organize your documents and save your tax return in a secure way for at least 3 years, including all documents and supporting information. Consider securing your documents for up to 7 years if you have large items and large issues associated with the tax returns.

How should consumers prepare for the next tax season?

Taxes are complex, so it’s important to remember to prepare carefully and timely each and every tax year. This includes a basic organization plan for saving documents all year round. Also consider conducting a “mid-year tax projection” to estimate your taxes in the summer that way you have six months to adjust and do same at near year-end.

What do new investors need to know about filing taxes?

Tax returns represent the single largest financial transaction for Americans each and every year. Treat it that way including following some best practices. Guard your personal information as very important, do mid-year tax checks to avoid refund shock and balance due trauma from tax changes, life changes, pandemic changes and other big events. Finally, find a tax pro and make them your contact – even if you do it yourself; a pro can help check for facts or myths or when gets too complicated, to just file on your behalf.

What are some tax trends this year?

Tax year 2022 saw many new and important trends ranging from more complex tax returns to reduced refunds to more balance due tax returns. More people sought out help from tax professionals and still about 6570% of taxpayers getting a refund, a bit down from last year. Also, more self-employed and side gig income and refunds were down a bit – approaching pre pandemic amounts or about $2900.

But the final season evaluation is still ongoing, and much data is pouring in.

This interview originally appeared in our TradeTalks newsletter. Sign up here to access exclusive market analysis by a new industry expert each week. We also spotlight must-see TradeTalks videos from the past week.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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