Important Updates for the Coming Tax Season

Jan 64 min read

Updated: Jan 10

As the 2024 tax season approaches, taxpayers and businesses must stay informed about critical updates and deadlines to ensure a smooth filing process. Here’s a comprehensive guide to help you navigate this year’s tax requirements.

Key Takeaways for the 2024 Tax Season

Tax filing deadline: April 15, 2025
Extension deadline: October 15, 2025
Standard deductions and tax brackets have been adjusted for inflation in 2024
Net Investment Income Tax (NIIT) remains unchanged
Energy efficiency credits and electric vehicle credits continue to expand

Income Brackets and Rates for 2024

Your tax rate is determined by your income and falls within specific brackets. Each portion of your income is taxed at the rate for that bracket, rather than applying a flat rate to your entire income. For instance, if your taxable income is $180,000 and you’re married filing jointly, you fall into the 22% tax bracket. However, only the portion of your income above $94,300 is taxed at 22%; lower portions are taxed at the lower rates of their respective brackets.

The highest tax rate for 2024 is 37%, applying to single filers with incomes over $609,350 and married couples filing jointly with incomes over $731,200. The other rates are:

35% for incomes over $243,725 (or $487,450 for married couples filing jointly).
32% for incomes over $191,950 (or $383,900 for married couples filing jointly).
24% for incomes over $100,525 (or $201,050 for married couples filing jointly).
22% for incomes over $47,150 (or $94,300 for married couples filing jointly).
12% for incomes over $11,600 (or $23,200 for married couples filing jointly).
10% for incomes up to $11,600 (or $23,200 for married couples filing jointly).

Each bracket applies to the portion of your income that falls within that range.

Higher Standard Deductions for 2025

For 2025, the standard deduction has increased to account for inflation. When itemized deductions exceed the standard deduction, we’ll prepare a Schedule A with your return.

$14,600 for single filers
$29,200 for married couples filing jointly
$21,900 for heads of household
$1,550 additional standard deduction if 65 and older.

Key Credits and Deductions to Know

Electric Vehicle Credits

Tax credits for qualifying EVs and plug-in hybrids have been updated. Under the Inflation Reduction Act, vehicles must meet specific North American assembly and critical minerals sourcing requirements to qualify for full credits. The credit amount can go up to $7,500 depending on the vehicle and battery composition. Check the IRS website for a list of eligible vehicles and their respective credit amounts.

Additionally, a new provision allows buyers to transfer the credit to dealers at the point of sale, potentially reducing upfront costs.

Up to $7,500 for new clean vehicles meeting price and income thresholds.
Up to $4,000 for used clean vehicles with additional restrictions.
Up to $40,000 for commercial clean vehicles.

Taxpayers who transferred this credit to the dealer will have to repay the tax when they file their 1040 if their income is above the threshold. One work-around for taxpayers above the threshold is to add another person to the title who is below the threshold and apply the credit to their return.

Energy-Efficient Home Improvement Credits

Credit of up to 30% of qualifying energy improvements with a $1,200 annual limit.
Credits apply to primary and secondary residences.

Child and Dependent Care Credits

Nonrefundable credit covering up to $3,000 of expenses for one dependent or $6,000of expenses for two or more dependents.

New Rules for 1099-K Reporting

The reporting threshold for third-party payment platforms (e.g., PayPal, Venmo) remains at $5,000, following updates in previous tax years. This means that even small-scale sellers and gig workers may receive a 1099-K form if their earnings exceed this amount.

To avoid discrepancies, ensure that all personal and business transactions on these platforms are categorized correctly. Keep detailed records of income and expenses to substantiate reported figures and avoid misclassification of taxable income.

Education Credits

American Opportunity Tax Credit (AOTC): Up to $2,500 per student, with $1,000 refundable.
Lifetime Learning Credit (LLC): Up to $2,000 per return for education expenses.

Charitable Deductions

Deduct up to 60% of your Adjusted Gross Income (AGI) for qualified donations when itemizing.

Medical Deductions

Deduct out-of-pocket medical expenses exceeding 7.5% of your AGI if you itemize.

Business Deductions

Self-employed individuals can claim expenses such as home office, travel, auto, phone, and internet, provided they relate to business activities.

Track Your Return Status

After filing, check the status of your federal tax refund online at www.irs.gov/refunds.

Get Started with Monotelo Today

These are general guidelines, and your specific circumstances may vary. Ready to start your 2024 tax return? UPLOAD YOUR DOCUMENTS or SCHEDULE A MEETING with our team at your convenience.

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