NEW TAX LAW UPDATES 2024

You're not alone if you heard news about changes to the Child Tax Credit (CTC) or other credits. Many were looking for information about CTC payments last year. It seems that many were reacting to misinformation on social media. The IRS has previously warned against misleading social media advice. Remember the importance of relying on our trusted tax advice to help you understand the latest tax law changes and if they affect you.

 Beginning in the 2025 filing season, the IRS will accept Forms 1040, 1040-NR and 1040-SS even if a dependent has already been claimed on a previously filed return as long as the primary taxpayer on the second return includes a valid Identity Protection Personal Identification Number (IP PIN). This change will reduce the time for the IRS to receive the tax return and accelerate the issuance of tax refunds for those with duplicate dependent returns. In previous years, the second tax return had to be filed by paper. 

A pandemic-related, temporary rule change in effect until the end of tax year 2024 lets more people take the Premium Tax Credit (PTC) and receive a larger tax break when they do. The law expands eligibility to those with a household income above 400% of the federal poverty level. Taxpayers who are eligible can receive larger credits due to the lower premiums that households must contribute (now between 0-8.5% of their income).

With 2025 being the last year this rule applies, taxpayers looking ahead to 2026 tax changes should note the overall Premium Tax Credit will decrease, so their share of the premium will increase.

Federal tax brackets and other amounts are typically adjusted each year for inflation. The tax table changes made headlines last year as the 2024 tax brackets and corresponding individual income tax rates for 2024 were substantially increased.  

• 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; 
• 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. 

 The IRS is implementing a tax reporting change, which requires third-party payment apps like Paypal,  Venmo, and Cash App to issue a 1099-K for anyone who earns self-employment income over a certain amount through these apps each year. For last year, if you earned $5,000 or more on a third-party app, you can expect to receive this tax form.

If you own a business, freelance, or have a side hustle, you're likely familiar with 1099 tax forms. You may have received a 1099-NEC (the IRS's nonemployee compensation form) from companies you've previously worked with. A 1099-K is similar, but instead of the company you work with issuing the form, you'll receive a tax form from the payment platform. Learn more on the IRS  1099-K tax form page. 

2024 tax changes allow for retirement plan emergency withdrawals of up to $1,000 letting those with certain expenses, such as unexpected auto repairs or medical bills, take a distribution without a penalty. But take note! While these distributions are penalty free, you may still incur taxes.

It’s worth mentioning there are other new exceptions for retirement distributions. These include withdrawals due to domestic abuse cases and qualified federally declared disaster distributions.