2024 IRS Tax Changes Everyone Needs to Know Before Filing

With tax season in full swing, many taxpayers are gathering their documents and preparing to file their 2024 returns. For those who are ready, the IRS has already begun accepting returns, making now the perfect time to get ahead of the deadline.

At the same time, it is worth noting that there have been some significant IRS tax changes implemented for the 2024 tax year that can affect taxpayers from a wide variety of backgrounds and income levels. All taxpayers should make themselves aware of these changes and consider how they may be affected by them before preparing and filing a 2024 return.

1. 1099-K Reporting Rules

Third party settlement organizations, also known as payment apps and online marketplaces will be required to report transactions when the amount of total payments for those transactions is more than $5,000 in 2024; more than $2,500 in 2025; and more than $600 in calendar year 2026 and later.

2. Tax Bracket Adjustments

Each year, tax brackets are adjusted by the IRS based on inflation — and 2024 is no exception. Before preparing their tax returns, then, all taxpayers are encouraged to review the updated tax brackets for 2024 and ensure that their bracket positions haven't changed. Because of adjustments for inflation, it is possible that taxpayers who were in one bracket last year may be in a different one this year, and this can affect tax rates.

3. Standard Deduction Adjustments

Just as tax brackets adjust annually to reflect inflation, the same applies to standard deductions. For 2024, for example, standard deduction amounts have increased as a result of inflation. This could affect whether taxpayers wish to take the standard deduction when filing their taxes or choose to itemize, which could have a major impact on an individual's tax liability.

For 2024, the standard deduction amount has been increased for all filers. The amounts are:

• Single or married filing separately — $14,600.
• Head of household — $21,900.
• Married filing jointly or qualifying surviving spouse — $29,200.
  
  

4. IRA Contribution Limit Increased

Beginning in 2024, the IRA contribution limit is increased to $7,000 ($8,000 for individuals aged 50 or older).

5. What About the Child Tax Credit?

Many taxpayers with dependents have also been wondering whether the Child Tax Credit (CTC) will see any changes for the 2024 tax year. As of January 2025, the verdict is still out as to whether a bipartisan tax deal will pass. However, if it does, this bill will expand the Child Tax Credit — so taxpayers with dependents should keep a close eye on this matter.

Ready to File?

With so many tax changes having occurred in 2024, now is a good time for all taxpayers to review these changes and consider how they may affect their tax returns. Doing so now can help to ensure that taxpayers prepare and file their returns correctly.

For those who are still feeling uncertain about how these changes may affect their 2024 tax returns, now it could also be a good time to consult with a tax professional. These professionals have the experience and up-to-date knowledge needed to provide taxpayers with tailored guidance and recommendations when it comes to filing their returns accurately and with confidence.

To learn more about LGT and how we can serve you, contact us here.