Jan 29, 2024 - Economy

Tax season is here: What to know about filing taxes, refunds

Illustration of a sign pointing in multiple directions featuring text from tax forms

Illustration: Sarah Grillo/Axios

The Internal Revenue Service kicks off tax season 2024 on Monday — six days later than last year — with a few changes and the rollout of the government's new pilot tax filing service.

Why it matters: The IRS Direct File pilot could reshape how millions of Americans do their taxes and disrupt the multibillion-dollar tax preparation industry.

By the numbers: 54% of American taxpayers plan to file their taxes early in hopes of getting refunds sooner, according to a new Credit Karma survey of 3,012 adults.

  • 31% of taxpayers said they will depend on tax refunds to make ends meet, which jumps to 40% for millennials and 38% for Gen Z taxpayers.
  • Nearly a third are dreading filing taxes, the online survey conducted last week by Qualtrics found.

Tax refund 2024: Bigger refunds, lower taxes

The big picture: Annual tax adjustments, including new tax brackets, an increased standard deduction and higher limits to 401(k) plans are lowering income taxes for many Americans this year.

  • Courtney Alev, Credit Karma's head of tax, told Axios that tax brackets had a "big bump" due to inflation and increased by 7%.
  • Alev, also a consumer financial advocate, said since the standard deduction is higher "taxpayers will need to consider whether it still makes sense to itemize deductions."

Flashback: Many Americans got smaller refunds last year after a few pandemic policies expired and tax credits returned to past levels, including the enhanced child tax credit and a lower Earned Income Tax Credit for taxpayers without children.

IRS tax deadline 2024

Details: April 15 is the tax filing deadline for most taxpayers to file their personal federal tax returns, pay any taxes owed or request an extension.

  • The IRS said it expects more than 128.7 million individual tax returns to be filed by the deadline.

Yes, but: Taxpayers living in Maine or Massachusetts have until April 17 because of the Patriot's Day and Emancipation Day holidays.

IRS tax refund schedule and Where's My Refund tool

The IRS said it issues most refunds in less than 21 days but "cautions taxpayers not to rely on receiving a 2023 federal tax refund by a certain date, especially when making major purchases or paying bills."

Meanwhile, refund status updates typically appear 24 hours after e-filing a current year return on the Where's My Refund tool, the IRS said.

  • For paper returns, plan to wait about four weeks for an update.
  • The IRS said filing electronically and choosing direct deposit is the fastest way to get a refund.

Direct File pilot offers another option to file taxes

What we're watching: The IRS is rolling out the free Direct File system as another option for filing taxes this year for 12 states.

  • Participating states include Arizona, California, Florida, Massachusetts, New Hampshire, New York, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming.
  • Taxpayers with relatively simple returns are eligible to participate in the pilot.

Of note: Alaska was initially scheduled to be included in the IRS pilot but is no longer on the list of participating states.

Between the lines: The IRS will first offer the program to federal and state employees in the 12 states, CNN reports.

  • By mid-March, the IRS expects to open Direct File to private sector workers in the states.

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