As tax season approaches, it’s vital for Massachusetts residents to prepare ahead to ease stress and potentially increase their tax refunds. With a few noteworthy changes to the tax code this year, now is the time to get organized.
A Boost from Tax Credits
Experts emphasize the importance of being proactive. “Make sure all your documents are in order. This year, you could see savings ranging from $200 to $2,000, depending on your income situation,” he notes. One of the most significant updates is the expansion of the Child and Family Tax Credit. This credit has increased to $440 per qualified dependent, offering families an additional $100 savings per child each year. For those curious about federal benefits, it’s advisable to explore eligibility for the federal child tax credit through the IRS.
Increased Relief for Renters
Renters in Massachusetts won’t be left out either. The state has enhanced the rental deduction, allowing tenants who paid rent to benefit from an extra $50 on their tax returns. As Nash points out, with rising rental costs, this increase is timely.
Special Considerations for Seniors
Seniors aged 65 and older who own or rent their principal residence may qualify for a refundable tax credit that could add up to $1,200 to their refunds.
Updates for Investors
Massachusetts residents engaged in stock or cryptocurrency trading can also take advantage of recent changes. The state has reduced short-term capital gain rates from 12% to 8.5%. Given that tax documents related to these investments generally arrive in February, Nash advises waiting for these forms before filing to avoid the complications of amendments and potential extra fees.
Reviewing Last Year’s Returns
Looking at prior year returns can also provide clarity. Taxpayers can log into their IRS.gov account to access recent tax records. Monika Hengesbach, an enrolled agent and founder of Decision Financial, suggests downloading transcripts through your ID.ME account to ensure no critical documents are overlooked—especially for those who may have moved recently.
Important Deadlines
The IRS typically starts accepting returns for the current tax year in late January, with all owed taxes due by April 15. This year, Nash warns that there will be no extensions for weekends or holidays, which means timely preparation is crucial. “Missing a form or deduction can cost real money, so plan accordingly,” he adds.
Fast Refunds Through E-Filing
For those looking to receive their refunds quickly, filing electronically and using direct deposit is the best option. According to Clay Sanford, a spokesperson for the IRS, “If everything is accurate, you can expect your refund in 21 days or less.” Taxpayers should also take advantage of the IRS Free File program, where millions can access trusted software tools at no charge via IRS.gov.
As the IRS moves forward with efforts to modernize and protect against scams, staying informed and proactive will empower taxpayers in navigating this year’s tax landscape.
