- February 8, 2024
- Posted by General Electric Credit Union
- 3 read
Navigating Tax Season 2024: Owing Taxes
As the 2024 tax deadline approaches, you may be in the position of expecting to owe money to the IRS. This may be the case if you made over $20,000 from a side hustle in 2023, you earn self-employment income (such as through a freelance gig), or you entered a new tax bracket. You can make filing taxes in 2024 less stressful with a clear plan and proactive strategies.
Tips if you anticipate a tax bill in 2024
1. Review your withholding
One common reason for owing taxes is inadequate withholding throughout the year. Review your W-4 form and consider adjusting your withholding allowances by contacting your employer. This can help ensure that the right amount of taxes is withheld from your paycheck, reducing the chances of owing a large sum during the next tax season.
2. Explore tax credits and deductions
Take advantage of available tax credits and deductions to minimize your tax liability, which could potentially include:
- The child tax credit. Up to $2,000 per child under the age of 17.
- Child and dependent care credit. Up to 35% of $3,000 to cover the cost of one dependent or $6,000 for two dependents so you can work.
- American opportunity tax credit (AOC). Claim $2,000 spent on tuition, books, school fees, and equipment. Then, 25% of the next $2,000 for up to $2,500. Living expenses and transportation are not eligible expenses.
- Student loan interest. Student loan payments started back up in October of 2023. Thankfully, current and former students can deduct up to $2,500 in interest on their 2024 taxes.
The tax credits above are only a few options and there are income requirements for them and many other credits.
3. Set up a payment plan
If you find yourself unable to pay the full tax amount by the filing deadline, don't panic. The IRS offers various payment plans to help individuals manage their tax debt. Explore options like an installment agreement, where you can pay in monthly installments. Be sure to contact the IRS to discuss your situation and avoid potential penalties.
Then, make paying off your tax debt a financial priority. Allocate a portion of your budget to cover the owed taxes and focus on eliminating this debt as quickly as possible. By prioritizing repayment, you can prevent the debt from lingering and causing further financial strain.
4. Adjust your financial habits
Use this tax season as an opportunity to reassess and adjust your financial habits so you’re better prepared for next year. For example, freelancers should set aside as much as 30% of their income for taxes. Doing so will help you get ahead of your tax liability, so you’re not stressed by a large tax bill.
- General Electric Credit Union (GECU) members can open multiple savings accounts to silo funds for different saving goals or needs, such as one named “tax bill.” Simply nickname your account within Online Banking or our mobile app by selecting the Settings option next to My Accounts.1
5. Consult a tax professional
Seeking advice from a tax professional can be invaluable. Tax experts can help you navigate the complexities of the tax code, identify potential savings, and guide you on which tax documents are needed to file. They can also assist in negotiating with the IRS if needed.
Careful planning and proactive measures can help you successfully navigate owing taxes. GECU has partnered with TurboTax to save you up to 10% when you file using TurboTax® Online™.2 Get your discount and file with confidence in 2024!