Tax tips for 2024

For many people, filing a tax return each year is a dreaded chore. It doesn’t have to be. A little
preparation and knowledge can ensure you file on time and take advantage of any credits and
deductions that will lower your tax bill.

The average 2023 refund was $3,167, according to the IRS, and you may look forward to a check
every year. But financial professionals counsel that it’s better to adjust your withholding allowances so
that you owe nothing or just a small amount when you file. That way you keep more of your money
throughout the year to use or boost your savings.

If you do receive a refund, it may be bigger than in past years. The IRS made inflation adjustments to
many tax rules for 2023, increasing the standard deduction, and raising tax brackets by 7.1 percent.
The goal was to prevent Americans from getting pushed into higher tax brackets if they received costof-living raises due to rising inflation.

You may be in a lower tax bracket this year, and if you choose the standard deduction, which 86
percent of taxpayers do, you may be eligible for more income deductions. All of this can lower your
final tax bill.

Here are important tips and changes for the 2024 tax season:
Get Organized. The biggest hurdle to filing on time is not having the records you need to complete
your tax return. Get organized now, by putting all tax-related mail in a folder or box as it arrives.
Here’s a handy timetable to know when to expect your statements.
Will you get a refund? Use this handy tax refund calculator from NerdWallet to find out. Then you
can determine what filing status will be the best for your situation.

How will you file?
If you are married, it’s a good idea to do your taxes two ways to determine which filing status saves
you the most: married filing jointly, or married filing separately.

Deductions vs. Credits
It’s helpful to understand the differences between tax credits and deductions, to maximize your tax
savings. Credits are dollar-for-dollar reductions to the total tax you owe, while deductions lower your
taxable income.

Standard Deductions
For married couples filing jointly, the standard 2023 deduction is $27,700 for 2023, increased from
$25,900 in the 2022 tax year. That’s an increase of $1,800, while for single taxpayers and married
individuals filing separately, the standard deduction is $13,850 in 2023, compared with $12,950 last
year. That’s an increase of about 6.9 percent.

The standard deduction for those filing Head of household increased to $20,800 from $19,400 in
2022, an increase of 7.2 percent.

Refundable Tax Credits
The IRS offers various refundable tax credits. If you are eligible for one, and it is larger than the tax
you owe, you will receive the difference as a refund. Popular credits for low-income families that meet
the requirements are the Earned Income Tax Credit, with credits of up to $7,340, and the Child Tax
Credit for those with children under age 17. The maximum credit per child is $2,000 for taxes filed in
2024.

Child and Dependent Care Credit
This credit helps taxpayers pay for daycare for a child under 13 or other dependents while you work.
The credit is 35 percent of $3,000 of expenses for one dependent or $6,000 for two or more
dependents.

Saver’s Credit
The IRS wants to reward you for saving for retirement in an IRA, 401(k), 403(b) or certain other
retirement plans. The saver’s credit is taken as a percentage—10 percent to 50 percent of up to
$2,000 or $4,000 if filing jointly. The percentage you can take depends on your filing status and
income.

Student Loan Interest Deduction
Are you still paying off student loans? You may be able to write off up to $2,500 of taxable income if
you have paid interest on your loans during the tax year.

Deduction for state and local taxes
Owning a home is expensive, but you could save at tax time by deducting up to $10,000 ($5,000 if
married filing separately) for a combination of property taxes and either state and local income taxes
or sales taxes paid on the purchase of a primary home.

When you do your state tax return, be sure to review the list of over 40 Ohio credits to see if you
qualify for even more savings. Filing taxes can be stressful. But a little preparation and research could
make the process easier, and you just might end up with more money in your credit union account.