By Tracy Courage U of A System Division of Agriculture
With Tax Day just a few weeks away, the countdown is on to prepare and submit tax returns for 2024.
Tax filing season officially began Jan. 27 when the IRS began accepting paper and electronic tax returns. The agency said it expects more than 140 million individual tax returns to be filed by April 15.
Laura Hendrix, associate professor and extension personal finance expert for the University of Arkansas System Division of Agriculture, offers some tips and resources for filers looking to save money and make good use of their tax refunds.
Get organized
Tax filers need several documents, such as reports of income received in 2024, and information for tax credits, deductions and itemization.
“Keep the documents and tax forms you need to file your taxes in one place,” Hendrix said. “This way, you can prepare an accurate return, claim deductions or credits, and avoid errors that could delay your refund.”
Lists of items and forms required can be found on the IRS website: https://www.irs.gov
File electronically to get a faster refund.
Use direct deposit — Have your refund deposited directly into your bank account by using IRS Form 8888.
File for free
The IRS expects more than half of tax returns be filed this year with the help of tax professionals, but many people may save money by using one of several free tax preparation options:
· IRS Free File — The IRS partners with several tax preparation companies for Free File. It’s available to anyone with an adjustable gross income of $84,000 or less. Adjusted gross income (AGI) is total income minus deductions. To learn more and see the list of tax prep companies, visit the IRS website at https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free
· MyFreeTaxes helps people file their taxes for free full tax preparation for income $67,000 or less and free self-filing service for income of $84,000 or less. United Way provides MyFreeTaxes in partnership with the IRS’s Volunteer Income Tax Assistance program, known as VITA, to help filers prepare their tax returns on their own or have their return prepared for them for free. https://myfreetaxes.com/
· Volunteer Income Tax Assistance and Tax Counseling for the Elderly sites do free tax preparation for people who qualify. For locations, visit https://irs.treasury.gov/freetaxprep/
· AARP Tax Aid provides free assistance at several in-person locations in Arkansas and online for filers with adjusted gross income of $84,000 or less. https://secure.aarp.org/applications/VMISLocator/searchTaxAideLocations.action
· MilTAx — Service members and their families, including retired and National Guard can file for free with MilTAx. https://www.militaryonesource.mil/financial-legal/taxes/miltax-military-tax-services
Get tax credits
· Earned Income Tax Credit (EITC) — This is a refundable credit (money sent to you after taxes). If you worked or were self-employed and earned less than $66,819, you can receive the Earned Income Tax Credit by filing a tax return.
· Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC) – These tax credits are for filers with qualifying dependents. The Child Tax Credit is applied to the tax bill; the Additional Child Tax Credit is refundable. Children must be under age 17 and must have lived with you for more than half the year. The Child Tax Credit is worth a maximum of $2,000 per qualifying child. Up to $1,700 is refundable.
If you have income below the standard deduction threshold, which is $14,600 for single filers and $29,200 for those married filing jointly, you may not be required to file a return. However, you may want to file anyway so you can receive refundable tax credits.
IRS Tax Assistant is an online tool and calculator that can help filers determine qualifications and estimate amounts. https://www.irs.gov/help/ita
Take deductions
A deduction is an amount you subtract from your income when you file so you don’t pay tax on it. Tax filers either take the standard deduction or they itemize deductions.
“Most people take the standard deduction, which lets you subtract a set amount from your income based on your filing status,” Hendrix said. “If your deductible expenses and losses are more than the standard deduction, you can save money by itemizing, or deducting them one-by-one from your income. Tax software can walk you through your expenses and losses to show the option that gives you the lowest tax.”
The standard deductions for 2024 are $14,600 for single or married filing separately; $29,200 for married couples filing jointly or qualifying surviving spouse; and $21,900 for head of household.
“If you’re married filing separately, you can’t take the standard deduction if your spouse itemizes,” Hendrix said. “You must both choose the same method.”
Save money
After taxes are filed, Hendrix urges people to think ahead of how they can best use tax refund money.
“This windfall money comes around only once a year, so take time to think about how you can make the most of your tax refund,” Hendrix said. She recommends putting at least part of the refund into savings because “it’s easier to save money you’ve never seen or had in your hands.”
She recommends these options:
· Build an emergency fund. “You should aim to have at least $1,000 in an emergency fund, and a tax refund is a great way to start.”
· Pay off debt — “Paying off debt is as important as saving,” Hendrix said. “Use your refund to pay off some or all credit card debt, or use the extra to pay down a car, home, or other loan. Paying additional to the principal of a loan can take months off your loan and save money in interest.”
· Boost your retirement funds.
· Save for a child’s education.
· Save for big items.
For more information on personal finance, visit uaex.uada.edu/money. To learn more about extension programs, contact your local Cooperative Extension Service agent or visit www.uaex.uada.edu. Follow us on X and Instagram at @AR_Extension. To learn more about Division of Agriculture research, visit the Arkansas Agricultural Experiment Station website: https://aaes.uark.edu. Follow on X at @ArkAgResearch. To learn more about the Division of Agriculture, visit https://uada.edu/. Follow us on X at @AgInArk.
About the Division of Agriculture
The University of Arkansas System Division of Agriculture’s mission is to strengthen agriculture, communities, and families by connecting trusted research to the adoption of best practices. Through the Agricultural Experiment Station and the Cooperative Extension Service, the Division of Agriculture conducts research and extension work within the nation’s historic land grant education system.
The Division of Agriculture is one of 20 entities within the University of Arkansas System. It has offices in all 75 counties in Arkansas and faculty on three campuses.
The University of Arkansas System Division of Agriculture offers all its Extension and Research programs to all eligible persons without regard to race, color, sex, gender identity, sexual orientation, national origin, religion, age, disability, marital or veteran status, genetic information, or any other legally protected status, and is an Affirmative Action/Equal Opportunity Employer.
