Tax Season 2024: What You Need to Know
As the Internal Revenue Service (IRS) prepares to accept returns for the 2024 tax year on January 27, it’s essential to stay informed about the changes and updates that may impact your filing process.
Major Life Events? Expect Changes
If you’ve experienced significant life events in 2024, such as getting married, having a child, or buying a house, your tax filing process will likely be affected. However, for those who haven’t undergone significant changes, the filing process remains relatively unchanged from last year.
Expanded Free Filing Options
The IRS has expanded its popular Direct File program, making more taxpayers eligible to file for free directly through the agency. Residents of Alaska, Connecticut, Idaho, Illinois, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, and Wisconsin can now take advantage of this program. Additionally, taxpayers claiming certain credits, such as the Child Tax Credit, can also use Direct File.
Tax Brackets and Deductions
For tax year 2024, the standard deduction for single filers is $14,600, while joint filers can claim $29,200. Top-earners, with taxable income exceeding $609,350 for individuals or $731,200 for couples, will continue to pay a 37% marginal tax rate. The remaining tax brackets for 2024 filings are as follows:
Electric Vehicle Credits and More
Filers who purchased an electric vehicle in 2024 can claim up to a $7,500 credit for new cars and $4,000 for used vehicle purchases. However, the future of this credit is uncertain, as President Donald Trump has expressed plans to end it. Married parents earning up to $400,000 or single filers earning up to $200,000 can also claim the Child Tax Credit worth up to $2,000 per dependent child under age 17.
Reporting Online Income
If you received over $5,000 on Venmo, PayPal, or other payment platforms in exchange for goods and services, you’ll likely receive a 1099-K form to report that income on your taxes. This means that if you sold items online, you may owe taxes on your profits. The threshold for reporting this income will drop to $2,500 in 2025 and $600 in 2026.
By understanding these key changes and updates, you’ll be better equipped to navigate the 2024 tax filing process with confidence.
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