The Internal Revenue Service (IRS) has recently shared important information regarding changes that could affect taxpayers as they prepare to file their taxes for the year 2024. As tax season kicks off, the IRS wants people to be aware of updates that could impact the way they file their returns, along with the amounts they may owe or get refunded.
This is important because the deadline to file taxes is fast approaching, and making a mistake or missing out on new benefits could lead to penalties or missed savings. Here’s a breakdown of what you should know to avoid surprises.
Key Changes for 2024 Tax Returns
As the IRS works to guide taxpayers through the tax season, they have highlighted several key changes that could impact your 2024 returns. Whether it’s an increase in the standard deduction or changes to credits like the Child Tax Credit (CTC), being aware of these updates is important to ensure you file your taxes correctly.
Increased Standard Deduction for 2024
One of the biggest changes for the 2024 tax year is an increase in the standard deduction. The standard deduction reduces the amount of your income that is taxable, meaning you may pay less in taxes overall. Here’s the new amount for the 2024 tax year based on your filing status:
- Single or Married Filing Separately: $14,600
- Head of Household: $21,900
- Married Filing Jointly or Qualifying Surviving Spouse: $29,200
In comparison, for the 2023 tax year, the standard deduction was $13,850 for single filers and $20,800 for heads of household. This increase means you can claim more of your income as a deduction, reducing your taxable income.
Updates on the Child Tax Credit (CTC)
The Child Tax Credit (CTC) is one of the most commonly used tax benefits for families. The IRS has made it clear that if any changes are made to the CTC in the future, taxpayers who have already filed will not need to take any action. The IRS will automatically update your return if necessary. Here are the key details about the CTC for 2024:
- Base amount: $2,000 per qualifying child
- Phase-out: The credit starts to reduce for incomes above $200,000 (or $400,000 for married couples filing jointly).
- Age limit: A child must be under 17 years old by the end of 2024 to qualify for the credit.
The IRS also shared that if you claim the CTC, you should file your 2024 taxes promptly, as it can impact your refund amount.
Additional Child Tax Credit (ACTC) Increases
The Additional Child Tax Credit (ACTC) is another benefit that can help reduce the amount of tax you owe. For 2024, the maximum amount you can claim for each qualifying child has increased to $1,700.
Also, a key change is that Puerto Rican residents no longer need to have three or more qualifying children to claim the ACTC. Instead, they may qualify with at least one child.
Refunds related to the ACTC will be delayed until mid-February 2025, so if you are expecting a refund, keep this in mind.
Earned Income Tax Credit (EITC) Changes
The Earned Income Tax Credit (EITC) helps low-income workers, but there are new rules for 2024. To qualify for the EITC without a child, taxpayers must now be at least 25 years old but under 65 years old by the end of the year. This rule also applies to joint filers, with at least one spouse needing to meet the age requirement.
Adoption Credit Updates
If you are adopting a child, the IRS has increased the Adoption Credit for 2024. The credit and exclusion for employer-provided adoption benefits are now set at $16,810 per eligible child. This credit starts to phase out if your income exceeds $252,150, and it is fully phased out for incomes above $292,150.
Clean Vehicle Credit Details
The Clean Vehicle Credit, which supports those purchasing eco-friendly vehicles, will now require taxpayers to report the credit using Form 8936. This form is essential to claim the credit, which is available for new and previously owned clean vehicles purchased after 2022.
What to Keep in Mind When Filing Your Taxes
Tax season can be overwhelming, especially when there are so many updates to keep track of. But understanding these changes can help you file your taxes properly and avoid any surprises. If you qualify for any of the above credits or deductions, make sure you claim them to potentially lower your tax bill or increase your refund.
The IRS encourages taxpayers to file their taxes as soon as possible to avoid any delays in processing. If you’re eligible for credits like the Child Tax Credit or Earned Income Tax Credit, filing early can help ensure you get your refund on time.
As the tax deadline approaches, the IRS has released important information to ensure taxpayers are ready for the 2024 tax season. From increases in the standard deduction to updates on various credits like the Child Tax Credit and Earned Income Tax Credit, it’s crucial to stay informed. Taking the time to understand these changes can save you money and prevent costly mistakes when filing your tax return. Make sure to gather your documents, double-check your filing status, and file on time to avoid penalties.
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