Tax season is upon us. Everything you need to know to file in Rhode Island.

Wheeler Cowperthwaite, Providence Journal

The federal and state tax season officially starts on Jan. 29, the first day tax returns can be filed, and ends on April 15 for most taxpayers.

There are no big changes coming for this tax filing season for Rhode Islanders compared to last year. Most limits and deductions have gone up slightly, as they've been adjusted for inflation.

Here's what Rhode Islanders should know this tax season:

The standard federal deduction has increased

  • Singles/married filing separately: up $900 to $13,850

  • Married filing jointly: up $1,800 to $27,700

  • Head of household: up $1,400 to $20,800

Rhode Island's standard deduction has increased

  • Single: up $700 to $10,000

  • Married filing jointly: up $1,450 to $20,505

  • Married filing separately: up $725 to $10,025

  • Head of household: up $1,100 to $15,050

  • Personal and dependency exemption: up $350 to $4,700

2023's increased federal tax brackets

Tax rate

Single

Married filing separately

Head of household

Married filing jointly

12%

$11,000

$11,000

$15,700

$22,000

22%

$44,725

$44,725

$59,850

$89,450

24%

$95,375

$95,375

$95,350

$190,750

32%

$182,100

$182,100

$182,100

$364,200

35%

$231,250

$231,250

$231,250

$462,500

37%

$578,125

$346,875

$578,100

$693,750

For those who made the same amount of money in 2023 as in 2022, their total Rhode Island and federal tax bills should be lower this year, a combination of larger standard deductions and changes in tax brackets.

New retirement account contribution limits

  • 401(k), 403(b), 457 plans and Thrift Savings Plan contribution limits increased to $22,500

  • Individual Retirement Account and Roth IRA limits increased to $6,500. Contributions for 2023 can be made until the April 15 tax deadline.

Will Venmo, PayPal and other money apps send tax forms?

For everyone with a side hustle, or who uses a peer-to-peer payment companies (Venmo, PayPay, CashApp, Zelle), there had been concerns about recent changes that require the payment companies to send a 1099-K form to anyone who met a lower threshold of payments received of over $600.

In November, the IRS announced it plans to phase in the new reporting rules, which will require the payment companies to send the 1099-K forms to both the IRS and its users. This year, the threshold will stay the same as it was last year, $20,000 and more than 200 transactions. For the 2024 tax year, it will be reduced to $5,000, moving toward $600 at some later date, citing the confusion the proposed change is causing.

For people reimbursing each other, either paying a roommate half their rent or splitting a dinner bill, there is no tax consideration, unless they receive a 1099-K form.

If someone does receive a 1099-K in error for expense splitting or transactions between family or friends, the IRS' advice is to contact the sender, usually Venmo, Cashapp or Paypal, and ask them to send a corrected form, and keep all correspondence with the platform.

For anyone who gets the form and can't get a corrected one sent, the error needs to be reported on Form 1040 under adjustments to income, according to the IRS website.

1099, W-4, W-2, W-9, 1040: What are these forms used for when filing your taxes?

People who profited from selling concert or football tickets or sold furniture, clothes, electronics or crafts, still need to report the income, even if payment platforms don't send them a tax form.

The IRS estimated that the new, significantly lower $600 threshold would have triggered an extra 28 million 1099-Ks being issued in 2024 for reporting income on 2023 tax returns.

Property tax relief credit 'circuit breaker'

The state's property tax relief credit, also called a "circuit breaker" program, increased its maximum credit and increased its income limits.

The potential tax credit has increased to $650 and the income limit has increased to $37,870.

The Economic Progress Institute describes the tax credit as being for people 65 and older or disabled people receiving Social Security disability benefits.

Rhode Island earned income tax credit will increase to 16% for 2024 tax year

Rhode Island's earned income tax credit is 15% of the federal tax credit for taxes filed this year, but it will be 16% for taxes filed next year. Earned income tax credits give low-income tax filers, especially those with children, a tax credit or refund.

How to file your taxes for free with help or by yourself

There are two main ways to file federal and Rhode Island taxes for free in 2024: use one of six free tax preparation programs offered through the IRS' Free File program (maximum adjusted gross income: $79,000) or work with a volunteer, IRS-certified tax preparer in person at one of 24 sites across the state, part of the Volunteer Income Tax Assistance, or VITA, program.

Read our full how-to guide on filing your taxes for free.

Filing taxes for free with an adjusted gross income below $79,000

Six companies are offering free tax preparation programs for both federal and Rhode Island tax returns this year, part of the IRS' Free File program. The maximum income is $79,000, but many of the vendors have lower income limits.

Volunteer tax preparers offer free help people with income below $63,398

People with income at or below $63,398 can get free state and federal tax preparation from IRS-certified preparers through the Volunteer Income Tax Assistance program, spearheaded by the United Way of Rhode Island.

There are 24 sites in the state and all but one require appointments.

Read about the program, or see the full list of sites below.

Bristol

  • Bristol EBCAP/Benjamin Church, (401) 435-7876 x1137

Central Falls

Cranston

  • Comprehensive Community Action, (401) 467-7013

East Providence

  • East Bay/East Providence Senior Center, (401) 435-7876 x1137

Johnston/North Providence

  • Tri-County Community Action Agency, (401) 519-1915

Pawtucket

  • BVCAP Woodlawn Community Center, (401) 475-5051

Providence

  • Amos House, (401) 272-0220

  • Capitol City Community Center/Lillian Feinstein Senior Center, (401) 207-0223

  • CAPP Hartford Ave., (401) 273-2000

  • Center for Southeast Asians, (401) 274-8811

  • Federal Hill House, (401) 421-4722

  • Indigenous Empowerment VITA, (401) 255-6238

  • OpenDoors, (401) 214-1807

  • Providence Spanish SDA Church, (401) 270-9996

  • The Genesis Center, (401) 781-6110 x13

  • Mount Hope Community Center, (401) 521-8830 x 102

  • Johnson and Wales University, (401) 568-4789

Wakefield

  • Tri-County Community Action South, (401) 515-2490

  • JonnyCake Center of Peace Dale, (401) 789-1559 x10

Warwick

  • Westbay Community Action, Inc., (401) 384-7779

Westerly

  • WARM - Westerly Area Rest and Meals, (401) 596-9276 x113

  • Westerly Education Center, walk-in site

Woonsocket

  • Community Care Alliance, (401) 235-7187

  • Connecting for Children and Families, (401) 766-3384

The RI vehicle excise tax has been phased out

For years, anyone who had a car registered in Rhode Island received a bill from the municipality where the car was registered for an excise tax on the value of the vehicle.

The tax was set to wind down over five years, until the 2022 legislative session, when lawmakers ended it a year early.

Vehicle owners will no longer receive a bill for the vehicle excise tax.

What is the child tax credit for 2023?

The federal child tax credit for 2022 and 2023 is $2,000, a decrease from the maximum higher rate of $3,600 per dependent in 2021.

The American Rescue Plan increased, in 2021, the maximum child tax credit to $3,600 for children under 6 and to $3,000 for children ages 7 to 17.

Income limits for the earned income tax credit

The federal earned income tax credit is for working people with low incomes to get a small boost to their income at tax time, mostly focused on people with children.

The tax credit is "refundable," so if the credit exceeds the amount paid in taxes, someone will receive the difference in a check. Earning limits refer to adjusted gross income.

Single or head of household earning less than:

  • $17,640 – no qualifying children

  • $46,560 – one qualifying child

  • $52,918 – two qualifying children

  • $56,838– three or more qualifying children

Married, filing jointly, earning less than:

  • $24,210 – no qualifying children

  • $53,120 – one qualifying child

  • $59,478 – two qualifying children

  • $63,398 – three or more qualifying children

Health savings account limits raised for 2023

Health Savings Account, known as HSA, account limits were raised in 2023 to $3,850 for a single person and $7,750 for families.

In 2024, the limit is $4,150 for singles and $8,300 for families.

Property taxes in Rhode Island

Property taxes in Rhode Island are levied by individual municipalities, which set their own rates. Many, including Providence, offer a homestead exemption to reduce the tax bill for those who live in the properties they own.

Are taxes higher in Rhode Island or Massachusetts?

According to the Tax Foundation, Rhode Island has a higher tax burden, 11.4%, than Massachusetts, at 10.8%.

Unlike Rhode Island, Massachusetts has a flat personal income tax rate of 5%. Rhode Island has a higher income tax rate of 5.99%, but only on income above $155,050.

In Rhode Island, income is taxed at 3.75% up to $68,200 and at 4.75% for $68,200 to $155,050.

Is Rhode Island a tax-friendly state for retirees?

According to the website Kiplinger, Rhode Island is not a tax-friendly state for retirees, mostly because of high property taxes. Social security benefits are not taxed when they are below $95,800 for a single filer or $119,750 for joint filers.

What types of taxes are there in Rhode Island?

Rhode Island has an income tax, a capital gains tax, a corporate income tax, a sales tax, an inheritance tax, property taxes and excise taxes.

Gas is an example of a good that gets an excise tax.

Rhode Island has a higher base sales tax rate of 7%, compared to Massachusetts's 6.25%.

Is there sales tax in RI?

Yes, Rhode Island has a sales tax. The base rate is 7%.

What taxes do you pay in Rhode Island?

Rhode Island has an income tax, a capital gains tax, a corporate income tax, a sales tax, an inheritance tax, property taxes and excise taxes.

Gas is an example of a good that gets an excise tax. Gov. Dan McKee has proposed, in the 2023 budget, to freeze a gas tax increase.

Quarterly tax due dates

If you earn income that isn't subject to withholding taxes, you're typically required to make estimated tax payments to the IRS. You can do this on a quarterly basis or through one annualized estimate. The annualized estimate is due on April 15.

The quarterly payments for 2024 are due by the following dates:

  • First payment: April 15.

  • Second payment: June 17.

  • Third payment: Sept. 16.

  • Fourth payment: Jan. 15, 2025.

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Material from USA Today was used in this report. Reach reporter Wheeler Cowperthwaite at wcowperthwaite@providencejournal.com or follow him on Twitter @WheelerReporter.

This article originally appeared on The Providence Journal: How to file your taxes in Rhode Island: Tax credits, file for free, etc.

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