The IRS announced Monday, Jan. 29, 2024, as the official start date of the nation's 2024 tax season when the IRS will begin accepting and processing 2023 tax returns. For most individual taxpayers, the tax deadline to submit your 2023 tax returns or an extension to file and pay tax owed is Monday, April 15, 2024. Here are what you need to know for tax season 2024.
Income Tax Bracket
Standard Tax Deduction
The standard deduction rose $1,500 from 2023 to $29,200 formarried couples filing jointly. Single taxpayers and married individuals filing separately can take a standard deduction of $14,600, an increase of $750. Heads of households get a $21,900 standard deduction, up $1,100.
Contribution Limits for Retirement Plans
The most an employee can contribute to a 401(k) plan in 2024 will be $23,000, a $500 increase from 2023. This limit also applies to 403(b) and most 457 plans, as well as the Thrift Savings plan for federal employees. For people with Individual Retirement Accounts, the limit was raised to $7,000 from $6,500. The IRA catch-up contribution limits to retirement plans for people aged 50 and over were not changed.
Reporting Requirements for 1099-K Forms
Under a new rule enacted in 2021, third-party payment processors must issue a Form 1099-K to any individual who receives $600 or more in payments for goods or services during a year. However, the IRS will not enforce the new rules for tax year 2023. Instead, third-party payment processors may operate under the prior rules, only sending 1099-K forms to users who received over $20,000 in payments through over 200 transactions. In
addition, 2024 will serve as a phase-in year, with the 1099-K reporting threshold set at $5,000. Full implementation of the $600 threshold will not occur until at least 2025.
Energy Related Credits
Taxpayers who bought a vehicle in 2023 should review thechanges under the Inflation Reduction Act of 2022 to see if they qualify for the credits for new electric vehicles purchased in 2022 or before or the new clean vehicles purchased in 2023 or after. To claim either credit, taxpayers will need to provide the vehicle's VIN and file Qualified Plug-in Electric Drive Motor Vehicle Credit with their tax return. If taxpayers made energy improvements to their home, tax credits are available for a portion of qualifying expenses. The Inflation Reduction Act of 2022 expanded the credit amounts and types of qualifying expenses. To claim the credit, taxpayers need to file Residential Energy Credits with their tax return.
New Clean Vehicle Credit Rules in 2024
Starting January 1, 2024, buyers of new and used electric (EV), plug-in hybrid (PHEV) and fuel cell vehicles may transfer the Clean Vehicle Credit to a car dealer in exchange for a lower price. The amount of the Clean Vehicle Credit depends on a variety of factors, including battery size and the origin of critical components. Buyers will be able to choose to transfer their new clean vehicle credit of up to $7,500 and their previously owned clean vehicle credit of up to $4,000 to a registered car dealer. For both new and used vehicles, the Clean Vehicle Credit is subject to income limits.
Who Should Make Estimated Quarterly Tax Payments
The income tax is a pay-as-you-go tax. You must pay the taxas you earn or receive income during the year. People who generally may have estimated tax payment obligations (for both Federal and California FTB) are 1099 workers, W-2 workers who are not withholding enough to cover their tax bill, businesses, and some investors. If you didn’t pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay penalties and fees for underpayment of estimated tax. Last quarterly payment for 2023 is due on Jan. 16, 2024. The Tax Withholding Estimator on IRS.gov can help wage earners determine if there's a need toconsider an additional tax payment to avoid an unexpected tax bill when they
file.
For more tax updates, please visit the IRS and California FTB websites.
