IRS 2024 Updates: Insights on Refunds, Child Tax Credit, and SSI Guidelines | Professional Analysis

Reduced Refunds Explained

– Reasons for reduced refunds include:
– Overpayment in previous years
– Past due child support
– Outstanding student loans
– Other non-tax debts, such as state income tax or unemployment compensation debts
– Typically, a letter will be sent to you explaining the reason for a lower refund.
– For more details, you’re encouraged to contact the agency to which you owe money.
– For additional information, refer to IRS Topic 153.

SSI, Social Security & Tax Filing

Key points regarding SSI (Supplemental Security Income) and taxes:

• SSI benefits are not taxable; therefore, if SSI is your only income, you typically do not need to file a tax return.
• Nevertheless, it might be beneficial for some SSI recipients to file a tax return. Doing so could qualify you for tax refunds or credits, including the Child Tax Credit or the Earned Income Tax Credit (EITC).
• For tailored advice, consulting with an accountant is recommended. An accountant can evaluate your specific circumstances and advise whether filing a tax return is advantageous for you.

Child Tax Credit Update

The Senate is currently on a break, which means any updates regarding the Child Tax Credit will be on hold until they reconvene on February 26th, 2024. However, taxpayers have no reason to worry about delays in their refunds. The IRS has affirmed its readiness to expedite refund processing, regardless of the outcome with the Child Tax Credit. In the event that the Credit is approved, the IRS will automatically assess and determine who qualifies for the additional payments, ensuring that recipients won’t need to undertake any additional steps to receive these benefits.

Filing Taxes & Divorce

Key points regarding claiming a child as a dependent for tax purposes in cases of divorce or unmarried parents sharing custody:

• Only one parent can claim the child as a dependent for tax purposes.
• Usually, the custodial parent (the parent with whom the child spends the majority of the year) has the eligibility to claim the child as a dependent, including benefits like the Child Tax Credit.
• Form 8332: The non-custodial parent might be eligible to claim the Child Tax Credit for certain years by using IRS Form 8332, which necessitates the custodial parent’s consent and requires annual renewal.

IRS Transaction Codes Explained

Here’s a breakdown of some common IRS transaction codes you might encounter on your transcript:

• Understanding IRS Transaction Codes:
  • Transaction Code 826: Reflects that a portion of your refund was applied to offset existing tax debt.
  • Transaction Code 846: Indicates that a refund is on its way, possibly including interest approved by the IRS.
  • Transaction Code 570: Points to a freeze on your account, stopping the IRS from completing your refund process. It’s advisable to contact the IRS for further details.
  • Transaction Code 971: Signals that the IRS needs more information from you, often related to the issue indicated by code 570.
• Additional Resource: The IRS website provides a detailed list of transaction codes for in-depth understanding and reference.

IRS Free File Program Expands

Updates to the IRS Free File Program:

• Three additional states (Arizona, New York, and Massachusetts) have joined the test phase of the IRS Free File program, increasing the total to 12 participating states nationwide.
• The program offers taxpayers in these states the option to file federal taxes at no cost, offering an alternative to using commercial tax filing services.
• Initial responses from the trial group have been favorable, highlighting user-friendly experiences and efficient filing processes for participants.

Conclusion

The expansion of the IRS Free File program to include three more states marks a significant step towards making tax filing more accessible and affordable for Americans across 12 states. By providing a free federal tax filing option, the program aims to simplify the tax return process, reduce costs for taxpayers, and improve overall filing experiences. The positive feedback from early participants underscores the program’s potential to streamline tax season for many, offering a viable alternative to commercial tax services.

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