TAX UPDATES

2456 Sweetwood Street, Simi Valley, California 93063

Working Woman Income Tax Service

"Specializing in Saving Your Money"

TAX UPDATES FOR 2024

STANDARD DEDUCTION

For married couples filing jointly rises to $2,9200. For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600, and for head of households, the standard deduction will be $21,900. Plus additional amounts for those over 65 and/or blind.

FORM 1099-K REPORTING

The Internal Revenue Service is finally going to implement the filing of Form 1099-K, the reporting form from third party payments processors, but will have a higher threshold of $5,000 for 2024. This won't be contingent on how many transactions are received. This will report ALL types of payments, both personal and business, and it will be up to the taxpayer to decide which of these payments should be reported on their returns. Only business payments are includable on returns. This will be a challenge for tax preparers as well.

CAPITAL GAINS TAX RATES

These remain at - 0%, 15% or 20% (depending on your income) on most assets held for longer than a year. Capital gains taxes on assets held for a year or less are calculated at ordinary income rates.

MILEAGE RATES

The 2024 mileage rates are 67 cents per mile for business purposes, 21 cents for medical and 14 cents for charitable purposes.

THE EXEMPTION CREDIT

For other dependents (other than your child) and children under 19 or fulltime students under 24 is still $500. You can also claim other relatives or people who lived with you that made less than $5,050.

CHILD TAX CREDIT (CTC)

The child tax credit is still $2,000 per child under age 17 as of 12/31/24.

ADOPTION CREDIT

For adoptions finalized in 2024, there is a federal adoption tax credit of up to $16,810 per child. You can also get the credit for unsuccessful adoptions.

FAMILY CREDITS

Families who don't owe taxes can still claim tax credits. Families and individuals who qualify can file for the Child Tax Credit, the Earned Income Tax Credit and other tax credits. Even those without a child can get a certain about of Earned Income Credit.

SOLAR AND ELECTRIC CHARGING CREDITS

Don’t forget your solar credits. They are still at 30%. Mention anything that may qualify to your tax preparer. Also, certain electrical charging unit may offer a credit.

TAX DUE DATE

Tax due date for 2024 will be as usual on Tuesday, April 15, 2025.

VEHICLE AND ENERGY CREDITS

You can still qualify for a credit up to $7,500 if you buy a new, qualified EV. (It only reduces your tax liability for that one year without a carry forward possibility.) The Inflation Reduction Act of 2022 changed, but extended the terms for this credit for vehicles purchased between 2023 and 2032. There are still several clean vehicle and energy credits available.

Also, there is a previously-owned clean vehicles credit of up to $4,000 for the purchase of an eligible previously-owned clean vehicle with a sale price of $25,000 or less that is placed in service during a tax year by a qualified buyer. To claim the credit, a qualified buyer must meet certain income requirements

IRA Required Minimum Distribution Changes

When the SECURE 2.0 Act became law, the RMD age moved to 73. If you were born on or after January 1, 1951, you are not obligated to take RMDs in 2023. You don’t have to take out your first RMD until you reach the age of 73. You can choose to make your first RMD by the end of 2024 or delay it until April 1, 2025. That would be considered a distribution towards 2024, but then you'd have to take out another one by December 31, 2025. After that it would one per year by the end of each year.