Tax Updates

Key 2024 Tax Law Updates for Preparers

author

Olu Aladebumoye

Co-Founder

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As a tax preparer, your success hinges on staying informed and helping your clients navigate ever-changing tax regulations. While 2024 brings fewer updates compared to previous years, several key adjustments could significantly impact your clients' returns. Understanding these changes ensures you're prepared to deliver expert advice.

Key Tax Law Changes for 2024

1. Adjusted Tax Brackets

To account for inflation, the IRS has widened tax brackets. These updates may slightly increase refunds for certain taxpayers:

  • Single Filers: Up to $11,600 taxed at 10%.
  • Married Filing Jointly: Up to $23,200 taxed at 10%. Understanding these new thresholds allows you to plan better for your clients and anticipate potential savings.

2. Standard Deduction Increases

With higher standard deductions across all filing statuses:

  • Single Filers: $14,600 (up from last year).
  • Married Filing Jointly: $29,200.
  • Head of Household: $21,900. Encourage eligible clients to maximize their deductions and file confidently.

3. Lower 1099-K Reporting Threshold

The reporting threshold for Form 1099-K has decreased significantly to $5,000 (from $20,000). This change means more clients using third-party payment platforms like PayPal or Venmo will receive these forms. Educating your clients about this change is essential for accurate income reporting.

4. Enhanced Credits for Families and Workers

  • Child Tax Credit: The refundable portion has increased to $1,700 per child.
  • Earned Income Tax Credit: Maximum credit of $7,830 for families with three or more dependents. These enhancements provide vital support for families, especially those with moderate incomes.

5. Green Energy Incentives

  • Electric Vehicle Credit: Up to $7,500 for new EVs or $4,000 for used ones.
  • Energy Efficiency Upgrades: Credits for energy-saving home improvements like solar panels or efficient windows. Help your eco-conscious clients take advantage of these benefits before year-end.

6. Retirement Contribution Limits

Empower your clients to save for the future with increased contribution limits:

  • 401(k): $23,000 (or $30,500 for those 50+).
  • IRA: $7,000 (or $8,000 for those 50+).

How to Prepare for the 2024 Tax Season

  • Stay Informed: Regularly update your knowledge of tax law changes to remain a trusted advisor.
  • Educate Clients: Proactively inform your clients about how these updates affect their finances.
  • Plan Ahead: Use these changes to guide your clients in strategic tax planning.

Tax law changes may seem small, but their impact can be significant for your clients and your practice. By staying informed about these updates, you position yourself as a trusted advisor, ready to help your clients maximize their refunds, take advantage of credits, and plan for their financial future.

Knowledge is your most powerful tool—equip yourself with it to make this tax season your most successful yet. Your clients are counting on you, and with the right preparation, you’ll exceed their expectations.