TAX TIME 2024
GEORGE WILSON ADAMS CPA MBA
February 4, 2024
Tax Time 2024 is upon us and officially began on January 29, 2024. For Maine residents personal returns for 2023 will be due on Wednesday, April 17, 2024. Business tax returns for corporations, multimember LLC's, and partnerships will be due on Friday, March 15, 2024. Your return is considered filed on time if the envelope is properly addressed, has enough postage, is postmarked by the due date, and is physically deposited in the mail by the due date. These timely filing rules are subject to IRS Regulations pertaining to IRC Section 7502. I strongly recommend electronic filing of returns or certified mail.
Note that accountants must receive a signed e-file authorization form in order to have legal permission to file a return on your behalf.
While extension forms can always be filed, bear in mind that an extension of time to file is never an extension of time to pay taxes. You can extend your 2023 personal return until Tuesday, October 15, 2024. But your tax bill is legally due and payable on April 17 for Maine residents. The IRS and Maine will charge late payment penalties and interest on unpaid balances.
For residents of all other states (except Massachusetts) the due date for 2023 personal returns is Monday April 15, 2024.
Here is a list of key changes for 2023 returns filed in 2024:
(1) The new standard deduction for 2023 is as follows: $27,700 for married filing a joint return; $13,850 for single or married filing separately; and $20,800 for head of household. Individuals age 65 and older receive an additional $1,850 for their standard deduction. Few people itemize their deduction on Schedule A. The sum of all of your itemized deductions must exceed your standard deduction in order for you to benefit from itemizing.
(2) For the prior two years business owners could deduct 100% of the cost of business-related restaurant meals. For 2023 the old rule returns: only 50% of the cost of a qualifying meal may be deducted.
(3) The 2023 IRS mileage rate is 65.5 cents per mile; the 2024 rate is 67 cents per mile. Many clients ask me if they should use the mileage method or the actual method when deducting vehicle costs. My rule of thumb for answering this question is as follows: if you buy a low cost vehicle and put a ton of miles on it, use the mileage method.
Alternatively, if you purchase a more expensive vehicle and have only a moderate amount of miles per year then think about using the actual method. Every time you acquire a business vehicle you must decide which method to use. If your business operates more than 4 vehicles then the IRS requires you to use the actual method.
The actual method allows you to deduct vehicle costs for gas, repairs, vehicle insurance, etc. Even though you use the actual method, you are still required to keep track of business mileage.
(4) Interest on underpayments of estimated tax is now 8%. This rate is adjusted quarterly by IRS based on market conditions. The rate has not been this high for many years. You can avoid this cost by accurately estimating the amount of tax to pay IRS quarterly. Estimated tax payments are remitted to IRS using Form 1040-ES and are due on April 15, June 15, September 15 and January 15. Use Form 2210 to calculate the penalty for underpayment of estimated tax.
(5) For 2022 the standard IRS mileage rate for business miles was 58.5 cents for January 1 through June 30, and rose to 62.5 cents for the remainder of 2022. You must maintain contemporaneous records to document all mileage deductions.
For business owners with more than four vehicles used simultaneously you cannot use the standard mileage rate and must instead use the actual method for claiming vehicle expenses. In this case all actual vehicle costs such as fuel, repairs, insurance, etc. are deductible.
(6) Maine's pension income deduction has increased to $30,000 from $25,000. Note that your actual deduction is reduced by the amount of social security benefits you received (see Box 5 of your social security benefit statement.)
(7) Maine allows a deduction of up to $1,000 for qualified contributions to a Section 529 tuition plan, subject to income limitations.
(8) Here are 2023 federal income tax brackets which apply to taxable income and are based on your filing status:
2023 Marginal Income Tax Brackets for Returns Filed in 2024
| Tax Rate | Single Tax Bracket |
Married Filing Jointly |
Married Filing Separately |
Head Of Household |
| 10% | $0 to $11,000 | $0 to $22,000 | $0 to $11,000 | $0 to $15,700 |
| 12% | $11,001 to $44,725 | $22,001 to $89,450 | $11,001 to $44,725 | $15,701 to $59,850 |
| 22% | $44,726 to $95,375 | $89,451 to $190,750 | $44,726 to $95,375 | $59,851 to $95,350 |
| 24% | $95,376 to $182,100 | $190,751 to 364,200 | $95,376 to $182,100 | $95,351 to $182,100 |
| 32% | $182,101 to $231,250 | $364,201 to $462,500 | $182,101 to $231,250 | $182,101 to $231,250 |
| 35% | $231,251 to $578,125 | $462,501 to $693,750 | $231,251 to $346,875 | $231,251 to $578,100 |
| 37% | $578,126 or more | $693,751 or more | $346,876 or more | $578,101 or more |
Bear in mind that Congress has the power to change tax laws retroactively. Thus, every word of this article written on February 4, 2024 could be erased or modified by future laws enacted by Congress.
Remember that the very best answer for you is to always pay the legal minimum tax: not one cent more.
National Headquarters of the Internal Revenue Service, Washington DC. The inscription at the top of this building says:
Taxes are what we pay for a civilized society
2023 is the 111th year of the income tax in the United States, following ratification on February 3, 1913 of the 16th Amendment to the Constitution. See here for the very first U.S. income tax return for the year 1913:
https://intelligenceforrent.com/media/f1040--1913.pdf
George Adams
Certified Public Accountant Master of Business Administration
Tel: (207) 989-2700 E-Mail: GeorgeAdams@IntelligenceForRent.com
450 South Main Street: The HQ of IQ
Brewer, Maine 04412-2339
©2015 Copyright George Adams CPA MBA. All Rights Reserved.
