2024 Tax Updates: Key Changes to Be Aware Of

Tax season is here, and it's crucial to be aware of the latest updates for 2024 to ensure you're compliant and maximize your returns. Tax law is an everchanging beast, with new rules and regulations being introduced every year.

Professions are built around them, and the consequences of misreporting them can be hefty taxes from the IRS. But don’t fret; we are here to help you navigate through what has changed since last year! As we endure through the 2024 tax season, it is crucial to stay informed about the latest changes to ensure you file your taxes accurately and take advantage of any available deductions or credits. 

Increased Standard Deduction

The standard deduction for the 2024 tax year has been raised to $14,600 for single filers and $29,200 for married couples filing jointly. This adjustment was made to relieve taxpayers by reducing their taxable income. But what about the deductions for small businesses?

Deduction for Small Businesses

The deduction for qualified business incomes is 20% for the 2024 tax year. This deduction applies to pass-through entities such as sole proprietors, partnerships, and S-corporations, allowing business owners to deduct a portion of their qualifying business income from their taxable income.

Changes to Retirement Account Contribution Limits

Retirement account contribution limits have been adjusted for inflation. For 2024, the contribution limit for 401(k), 403(b), and most 457 plans has been raised to $23,000 for those under 50 and $30,500 for those 50 and above (with the catch-up contribution). The IRA contribution limit has also increased to $7,000 for those under 50 and $8,000 for those 50 and older.

Expanded Child Tax Credits

The Child Tax Credit has been decreased for the 2024 tax year. The credit amount has been changed to $2,000 per qualifying child under 17.

Increased Charitable Contributions Deduction

For those generous with their charitable giving, the deduction for charitable contributions has been increased for the 2024 tax year. Taxpayers can now deduct up to 60% of their adjusted gross income for cash donations made to qualifying charitable organizations and 30% for non-cash asset deductions. 

Key Takeaways

Staying informed about tax updates for 2024 is crucial for ensuring compliance and maximizing your returns. As a financial advisor, staying informed about these tax law changes and understanding how they may impact you (and your clients) is crucial. By staying informed and proactively addressing these changes, you can provide valuable guidance to clients, helping them minimize their tax liability and achieve their financial goals more effectively. 

As you prepare for tax season, you must consult with your tax professional to ensure you take advantage of all available deductions and credits. With proper planning and preparation, you can minimize your tax liability and enjoy the process of closing out another year. As always, the Books team is here to help keep your books clean and compliant throughout the year so you can be confident through the 2024 tax season.