Updates for Tax Year 2024

As we continue the 2024 tax year, there are several important updates to deductions, credits, and reporting requirements that can could impact taxpayers and tax professionals alike. From an increase in the standard deduction and enhancements to the Child Tax Credit to adjustments in the Earned Income Tax Credit (EITC) and new Clean Vehicle Credit guidelines, staying informed is essential for accurate and efficient tax filing. Here’s a breakdown of the key updates for the 2024 tax year.

Standard deduction amount increase. For 2024, the standard deduction amount has been increased for all filers. The amounts are:

• Single or married filing separately — $14,600.

• Head of household — $21,900.

• Married filing jointly or qualifying surviving spouse — $29,200.

  
  

Child Tax Credit enhancements. Taxpayers eligible for the Child Tax Credit should not wait to file their 2024 tax return. If Congress changes the CTC guidelines in the future, the IRS will automatically adjust for those who have already filed. Under current law for tax year 2024, the following currently apply:

• The initial amount of the CTC is $2,000 for each qualifying child. The credit amount begins to phase out where adjusted gross income (AGI) income exceeds $200,000 ($400,000 in the case of a joint return).

• A child must be under age 17 at the end of 2024 to be a qualifying child.

  
  

Changes to the Earned Income Tax Credit (EITC). To claim the EITC without a qualifying child in 2024, taxpayers must be at least age 25 but under age 65 at the end of 2024. If a taxpayer is married filing a joint return, one spouse must be at least age 25 but under age 65 at the end of 2024.

Adoption Credit. The Adoption Credit and the exclusion for employer-provided adoption benefits are both $16,810 per eligible child in 2024. The amount begins to phase out if taxpayers have a modified AGI in excess of $252,150 and is completely phased out if their modified AGI is $292,150 or more. For more information, see Form 8839 PDF and Instructions for Form 8839.

Clean Vehicle Credit. The Clean Vehicle Credit is reported on Form 8936 and Schedule 3 (Form 1040), line 6f. For more information, see Form 8936, Clean Vehicle Credit.

Previously owned Clean Vehicle Credit. This credit is available for previously owned clean vehicles acquired and placed in service after 2022. For more information, see Form 8936, Clean Vehicle Credit. More information on these and other credit and deduction changes for tax year 2024 may be found in Publication 17, Your Federal Income Tax (For Individuals), taxpayer guide.

IRA Contribution Limit Increased

Beginning in 2024, the IRA contribution limit is increased to $7,000 ($8,000 for individuals aged 50 or older) from $6,500 ($7,500 for individuals aged 50 or older) the prior year.

1099-K reporting requirements have changed for tax year 2024

The reporting threshold for 2024 has changed. Third-party settlement organizations (TPSOs), also known as payment apps and online marketplaces, are now required to report transactions when the amount of the total payments for those transactions in 2024 was more than $5,000. The IRS has issued Notice 2024-85 PDF providing transition relief for TPSOs. To understand what to do, taxpayers should become familiar with Form 1099-K.

---

Disclaimer: This article is for informational and educational purposes only and does not constitute legal tax advice. Advanced Tax Solutions is not liable or responsible for any damages resulting from or related to your use of this information. It is your responsibility to refer to official IRS documentation for information regarding any tax laws or tax information shown here.