Preparing for Tax Season 2024: Key Changes and Updates You Need to Know
As tax season 2024 approaches, it’s important to stay informed about key updates and changes to the tax code that can impact both individuals and business owners. Here’s a breakdown of the most critical changes you should know:
1. Standard Deduction Increase-saving you money
For 2024, the IRS has increased the standard deduction:
Single Filers: $14,600 (up from $13,850 in 2023)
Married Filing Jointly: $29,200 (up from $27,700)
This increase means more income is shielded from taxes, which could reduce your taxable income, leading to potential savings. If you don't itemize deductions, you can take advantage of this higher deduction.
2. Expanded Tax Credits- giving you money
Several tax credits have been adjusted for inflation or expanded:
Earned Income Tax Credit (EITC): The income thresholds for EITC eligibility have risen, making more families and individuals eligible for this valuable credit.
Child Tax Credit (CTC): The CTC remains significant, allowing parents to claim up to $2,000 per qualifying child. Be sure to check if there are any changes to your eligibility based on income or family circumstances.
Green Energy Credits: For business owners, new and extended tax credits are available for investments in renewable energy and sustainability initiatives, such as electric vehicles (EV) and solar panels.
3. Key Changes for Business Owners
Business owners need to be aware of updated thresholds and credits for 2024:
Section 179 Deduction: This allows businesses to deduct the full cost of certain property and equipment upfront. The 2024 limit has increased to $1.2 million, which can be a significant tax-saver for those planning to invest in business assets.
Qualified Business Income (QBI) Deduction: This deduction remains at 20% for eligible self-employed individuals and small business owners, but income thresholds have been adjusted. Consult a tax professional to ensure you maximize this deduction.
4. Contribution Limits for Retirement Accounts
For 2024, the IRS has raised contribution limits for various retirement accounts:
401(k) Contributions: The limit has increased to $23,000, allowing you to save more for retirement while also reducing taxable income.
IRA Contributions: The limit for IRAs is now $7,000, and individuals over 50 can contribute an extra $1,000 in catch-up contributions.
5. Tax Deadline Changes
While the filing deadline remains in April, be aware of any natural disaster extensions, IRS announcements, or special provisions that could affect your tax filing timeline.
How These Changes Affect You:
These changes may impact your overall tax liability, deductions, and credits available to you, so it's essential to adjust your tax planning accordingly. Whether you're an individual filer or a business owner, understanding these updates can help you take advantage of new opportunities and avoid pitfalls. Consult a tax professional if you need help navigating these updates.
Take Action Now
To ensure you're fully prepared, start gathering your documents early and stay informed of additional IRS updates. If you need expert assistance with your 2024 tax preparation, contact us at We Do Taxes for personalized support. Click here to book an appointment!
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