Updated my iMac 2012

You can't.

Your Mac is too old to run anything later than macOS 10.15 (Catalina).

Microsoft only supports the three most recent versions of macOS. Today, those are Sonoma, Sequoia, and Tahoe, but it won't be too long until Apple releases Golden Gate. It will not be very long after that before Microsoft drops support for Sonoma – making new installations on Sonoma impossible, and leaving existing Sonoma users without access to 365 / Office updates.

Microsoft Support – Upgrade macOS to continue receiving Microsoft 365 and Office for Mac updates

Your Mac is old enough that it does not even support the current version of LibreOffice or of most third-party Web browsers.

Catalina is still good enough to run

• An older and unsupported version of LibreOffice (see The Document Foundation Wiki – Documentation/System Requirements
• The current version of the Firefox Web browser
• The parts of Affinity Studio that are "free with registration". (The commercial photo editor GraphicConverter 12 will also run on Catalina. However, products like Adobe Photoshop Elements won't, and even GIMP (a powerful Free & Open Source photo editing program) does not support Catalina any more.)

So you might be able to get a bit more use out of that old Mac. However, as you can see, even if you use software from developers who have a history of supporting old versions of macOS, Catalina's days are numbered.

Since your iMac is too old to run Microsoft apps you might consider trying the free alternative LibreOffice and see if they have a version that will run on Catalina. It can open MS Office files, edit them and save them to MS Office formats or its own format. You may have to see if there's an older version of it for running on Catalina.

If you get to a point where a new Mac is the only way out of your predicament, consider the following:  a 10 Core Mac Mini M4 with 16 GB RAM and 1 TB SSD ($1299 US) with a 32" LG 4k monitor with speakers ($318 US from Amazon.com - this price is befor tarrifs and the Strait of Hormuz) is $1617 US which is $582 less than a similarly configured new 24" iMac ($2199 US). 

I got the above Mini with a 32" LG 4K monitor w/speakers for the same price as a 27" monitor (didn't know the Mini had a speaker).  There are many monitors available in 27" size for about $100 US to $500 US depending on what features you want.  e tax, tariffs and the Strait of Hormuz.

I had an 2017 i7 iMac with an SSD boot drive and the new Mini runs circles around it.  So much faster.  

You can use the keyboard and mouse from your current iMac. Don't recycle them with the iMac.

Just some food for thought.

You can't. You need to buy a new machine to upgrade.

Why Microsoft?

you can't the next os after catalia is big sur and your imac do not live up to the requirements of that

macOS Big Sur - Technical Specifications - Apple Support

• "iMac (2014 or later)"