As we enter 2024, several changes in the U.S. tax system could impact your filing this year. With updated rules, credits, and deductions, you must know the latest developments to ensure you maximize your return and stay compliant. At GTA Accounting, we’re here to guide you through these changes and help you prepare for the tax season ahead.

Standard Deduction Increases

Understanding the Changes to the Standard Deduction, the standard deduction has increased this year. For single filers, the deduction is now $14,000 (up from $13,850 in 2023), and for married couples filing jointly, it has risen to $28,000. This change could significantly lower your taxable income and result in a larger refund if you don't itemize deductions.

Child Tax Credit Adjustments

Checking Your Eligibility for the Child Tax Credit While the enhanced Child Tax Credit from the pandemic relief years has reverted, it remains a valuable benefit for families. In 2024, the credit remains $2,000 per child under 17, but eligibility thresholds have been updated. It's crucial for families to check if their income qualifies for full or partial credit to avoid surprises.

Earned Income Tax Credit (EITC) Expansion

The Earned Income Tax Credit was expanded in 2024, providing significant support, especially for those without children. Eligible individuals with low to moderate incomes can now claim a larger credit. Additionally, the income limits for EITC have increased, allowing more taxpayers to benefit from this critical financial support, making you feel more supported in your financial journey.

Retirement Contribution Limits

Good news for those saving for retirement: the contribution limits for both traditional and Roth IRAs have increased for 2024. Taxpayers can now contribute up to $7,000 (up from $6,500), with those aged 50 or older allowed an additional catch-up contribution of $1,000. This higher limit can reduce your taxable income and increase your savings for the future.

Changes to 1099-K Reporting

If you earn income through third-party payment platforms like PayPal, Venmo, or Etsy, you should know about changes to 1099-K reporting thresholds. Starting in 2024, the IRS requires payment platforms to issue a 1099-K form if you receive more than $600 in total transactions. This may result in more taxpayers needing to report small amounts of business or side gig income, so track your earnings accurately.

Energy-Efficient Home Improvements Credit

As part of the government’s push for clean energy, homeowners can claim a tax credit for specific energy-efficient home improvements made in 2024. The credit has been extended and expanded to cover costs for solar panels, energy-efficient windows, and other green upgrades. This credit could offset installation costs, helping you save on taxes while reducing energy costs.

Alternative Minimum Tax (AMT) Adjustments

The Alternative Minimum Tax (AMT) exemption amounts have increased for 2024, adjusting for inflation. The AMT primarily affects higher-income taxpayers, and this adjustment ensures fewer individuals will be subject to the AMT. If you have significant deductions, especially for state and local taxes, be aware of this change when filing.

Estate and Gift Tax Exemptions

For high-net-worth individuals, the federal estate and gift tax exemptions have risen again in 2024. The estate tax exemption is now $13.7 million, allowing individuals to transfer more wealth tax-free. Similarly, the annual gift tax exclusion has increased, enabling individuals to give up to $17,000 per recipient without incurring gift taxes.

Self-Employment Tax Changes

Self-employed individuals will see slight adjustments in the tax rate due to changes in Social Security wage base limits. The wage base for Social Security taxes has increased to $160,200, which may affect the total self-employment tax you owe if your income exceeds this amount.

IRS Crackdown on Cryptocurrency Reporting

The IRS continues to tighten its regulations around cryptocurrency transactions. In 2024, cryptocurrency exchanges must report transactions directly to the IRS, and taxpayers must declare any gains or losses on virtual currencies. This increased scrutiny provides a sense of security, ensuring that the system is fair and transparent for all taxpayers.

Filing Tips for 2024

Start Early: With changes to tax rules, starting your preparation early ensures you’ll have time to gather the necessary documents, understand your deductions, and avoid last-minute stress.

- **Use a Professional**: The complexities of tax laws mean it’s more critical than ever to seek professional help. At GTA Accounting, we can help you navigate the new changes and optimize your tax situation.

Staying Informed: Your Key to Tax Success Tax laws constantly evolve, so staying updated with the latest developments is crucial. It can help you maximize your savings and avoid penalties by ensuring you're aware of the latest changes.

Filing your taxes in 2024 doesn’t have to be complicated. With the guidance of experts at GTA Accounting, you can ensure you’re up to date with the latest tax changes and set yourself up for success. Contact us today to get started with your tax preparation!