TAX INFORMATION and UPDATES:

Form 1099-K: The IRS has again delayed the new $600 1099-K reporting threshold for third party payment organizations till 2025. This means for the 2024 tax year you will only receive one if you had over $5,000. For the 2025 tax year the threshold will be $2,500. This does not affect the reporting of income however. If you received income from eBay or similar sites, you are still required to report this on your return whether you receive 1099-K or not.

Child Tax Credit: It is a $2,000 credit per dependent under 17. The credit is partially refundable up to $1,700.

The income thresholds are $400,000 for married filing joint and $200,000 for all other filers.

Clean Vehicle (EV) Tax Credit: Up to $7,500 tax credit for buyers of eligible new electric vehicles. Final assembly must have occurred in North America. Sedans must have retail price below $55,000 and SUV’s, trucks, and vans must be under $80,000. Income ceilings are $150,000 for single filers, $225,000 for HOH, and $300,000 for married filing joint.

Residential Clean Energy Credit: This credit has been extended through 2034 and currently allows a credit of 30% of the cost for qualifying new solar, wind, geothermal, or biomass and fuel cell installations.

American Opportunity Tax Credit (AOTC): Can be claimed for students seeking a degree in the first 4 years of college. Can claim up to $2,500 per student in qualified education expenses. If tax has been reduced to zero, up to $1,000 of this credit can be refundable.

Lifetime Learning Credit (LLC): This credit is not refundable but allows up to $2,000 in qualified education expenses per return. Can be taken with the AOTC, but not for the same student.

Deduction for Medical and Dental Expenses: Under the Consolidated Appropriations Act the deduction floor has moved permanently to 7.5%. This means if the taxpayer itemizes, that he or she can deduct the expenses, which exceed 7.5% of adjusted gross income (AGI).

Standard Mileage Rates in 2024:

67 cents per mile for business

21 cents per mile for medical travel

14 cents for charitable service

Required Minimum Distributions (RMD’s): The SECURE Act 2.0 increased the age for required RMD’s to age 73.

Qualified Charitable Contribution (QCD): This is an option for taxpayers who are required to take annual RMD’s. They may donate up to $100,000 to charity directly from their IRA instead of taking the RMD. The donated amount is not included in taxable income.

Annual Gift Tax Exclusion for 2024 is $18,000, and for 2025 it is $19,000.

IRA Annual Contribution Limit for 2024 is $7,000, and $8,000 for those over 50.

For 2025 those limits are set to remain the same.

Student Loan Forgiveness: If your student loan was forgiven, there will be no tax on any loans forgiven through the end of 2025. Some states may differ with federal law and will tax the forgiven loan.

Home Office Deduction: If you run a Schedule C business from home or work from a home office, you might be eligible for a deduction. It will be based off of the percentage of your home that is used exclusively for business purposes.

Health Savings Account (HSA) Contributions: These contributions are tax-deductible, the earning also grow tax-free, and withdrawals for qualified medical expenses are also tax-free. You can contribute to an HSA up to the tax-filing deadline.

Student Loan Interest Deduction can be taken on any qualified education loan with a $2,500 maximum deduction regardless of the number of students in the family.  Only the individual who is legally required to make interest payments under the loan terms may claim the deduction.  So if only the student signs the loan, the parent can’t deduct the interest.        

Unemployment Compensation: Remember that unemployment compensation is generally taxable.

Foreign Earned Income Exclusion: For U.S. citizens or resident aliens living abroad, the Foreign Earned Income Exclusion allows you to exclude a certain amount of your foreign earnings from U.S. income tax. For the 2025 tax year, this exclusion is set to increase to $130,000.

Your Current Address With The IRS: It is the taxpayer’s responsibility to notify the IRS when their address changes.  When you file your next return, the IRS routinely modifies the address on their records but in the meantime whenever the taxpayer has a change of address it is important to file a Form 8822 to make that change.  This should be done so you don’t miss any mailings from the IRS.