8 Things to Know Before Filing 2024 Taxes
Tax season kicks off this week, and with it comes a handful of changes you’ll want to know about before filing your 2024 taxes.
From adjustments to standard deductions and tax brackets to updated rules on credits, contributions, and thresholds, staying informed may help you maximize your refund or reduce what you owe.
Read on to learn about 8 updates you want to know for your 2024 taxes.
#1 Standard Deduction Increase
When filing 2024 taxes, take advantage of the inflation adjustment for standard deductions.
According to the IRS, “The standard deduction for married couples filing jointly for tax year 2024 rises to $29,200, an increase of $1,500 from tax year 2023. For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, an increase of $750 from 2023; and for heads of households, the standard deduction will be $21,900 for tax year 2024, an increase of $1,100 from the amount for tax year 2023.”¹
This means that individuals can take the standard deduction and reduce their taxable income. For example, if an individual taxpayer earned $50,000, he could reduce his taxable income to $35,400 using the standard deduction.
#2 New Tax Brackets
Another thing to be aware of when filing 2024 taxes are the changes to tax brackets.
While there are still 7 different tax rates ranging from 10% to 37%, the tax brackets (or income ranges) for each of these 7 rates have changed due to inflation.
The changes are worth noting.
For instance, those who earned $46,000 in 2023 were in the 22% income tax bracket; however, those earning this same amount in 2024 are now in the 12% income tax bracket.
- 10% = $0 to $11,600 for single filers or $0 to $23,200 for married couples filing jointly
- 12% = $11,601 to $47,150 for single filers or $23,201 to $94,300 for married couples filing jointly
- 22% = $47,151 to $100,525 for single filers or $94,301 to $201,050 for married couples filing jointly
- 24% = $100,526 to $191,950 for single filers or $201,051 to $383,900 for married couples filing jointly
- 32% = $191,951 to $243,725 for single filers or $383,901 to $487,450 for married couples filing jointly
- 35% = $243,726 to $609,350 for single filers or $487,451 to $731,200 for married couples filing jointly
- 37% = $609,351 or more for single filers or $731,201 or more for married couples filing jointly
#3 Tax Credits
When filing 2024 taxes, be on the lookout for potential tax credits.
For example, due to the Inflation Reduction Act, taxpayers may earn a clean vehicle credit of up to $7,500 for purchasing a new electric vehicle or up to $4,000 for purchasing a used electric vehicle.
Also, for this tax year, you may be able to transfer the credit to an eligible dealer to reduce the amount you owe when purchasing an electric vehicle.
#4 New Tax Threshold on Capital Gains
If your total taxable income is $47,025 or less, you will not have to pay any capital gains tax.
This is an increase from 2023’s income threshold of $44,625.
Those earning more than $47,025 will have a capital gains tax rate of 15%.
#5 FSA Increase
Those with a Flexible Spending Account will also notice an increase.
The FSA limit has increased to $3,200 for 2024, and if your plan allows, you may carry over up to $640 from the FSA into the 2025 tax year.
#6 Save More in an HSA
Those with a Health Savings Account (HSA) can contribute up to $4,150 (couples/families can contribute up to $8,300).
Those 55 or older can take advantage of a catch-up contribution of an extra $1,000.
#7 1099-K Tax Forms
Those individuals who worked a side hustle and were paid through a third-party app, such as PayPal, Venmo, or Cash App, may receive a 1099-K tax form.
The IRS is requiring these third-party apps to issue a 1099-K for users who earn self-employment income of $5,000 or more.
#8 Don’t Forget You Still Have Time to Fund Your IRA
In 2024, IRA contributors will be able to invest up to $7,000, up from $6,500. The catch-up contribution limit for those 50 or older will be $8,000.
You have until April 15, 2025, to fund your IRA for 2024.
Better Prepare for a Life of Abundance in Retirement.
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