Stay Ahead of Law Changes & Protect Yourself Against Being Audited: Corporate Transparency Act and Reasonable Compensation

2024 Tax Updates

Navigating the 2024 Tax Landscape: What You Need to Know

 

Introduction:

As we gear up for the upcoming tax season, it’s crucial to stay ahead of the curve and be aware of the changes that will shape the 2024 tax landscape. In this blog post, we’ll explore key updates that individuals and businesses should keep in mind as they prepare for their 2023 taxes and plan for the year ahead.

 

Individual Tax Updates:

1. **401(k) Limit Increase:**
– The 401(k) contribution limit rises to $23,000, providing individuals with enhanced opportunities for retirement savings.

2. **IRA Contributions Boost:**
– IRA contributions see an increase to $7,000, up from $6,500, offering additional incentives for individual retirement planning.

3. **Adjusted Tax Brackets:**
– Tax brackets for 2024 have been adjusted to account for an annual inflation increase of approximately 5.4%, affecting how income is taxed.

4. **Child Tax Credit Continuity:**
– The Child Tax Credit is maintained at $2,000 per child under 17 for both 2023 and 2024, providing continued support for families.

5. **EITC Maximum for Families:**
– The Earned Income Tax Credit (EITC) reaches a maximum of $7,430 for families with three children, offering financial relief to eligible households.

6. **Standard Deduction Figures for 2023:**
– Individual: $13,850
– Married Filing Jointly: $27,700
– Head of Household: $20,800

7. **Child & Dependent Care Credit Adjustment:**
– The Child & Dependent Care Credit returns to pre-Covid levels, assisting families with the costs of child care.

8. **1099 K Reporting Threshold Maintained:**
– The 1099 K reporting threshold remains unchanged, impacting businesses and freelancers who receive payment through certain channels.

9. **Inflation Reduction Act Incentives:**
– Various incentives under the Inflation Reduction Act, including a 30% credit for Energy Efficient Property Equipment and an increased 30% credit for Energy Efficient Home Improvement with no lifetime dollar limit.

10. **Extended Electric Vehicle Tax Credit:**
– The Electric Vehicle Tax Credit is extended for used cars/vehicles, encouraging sustainable transportation choices.

11. **Student Loan Interest Deduction Resumes:**
– Student loan interest payments resume in Q4/2023, with a maximum deduction of $2,500 per year.

12. **Health Savings Account Limits:**
– HSA contributions are capped at $3,850 for self-coverage and $7,750 for family coverage.

13. **Flexible Spending Account (Retirement) Updates:**
– FSA contributions are set at $3,050, with an employer plan carryover of $610.

14. **Deductible Mileage Rate:**
– The deductible mileage rate is established at 65.5 cents for tax year 2023.

15. **Adoption Credit Increase:**
– An Adoption Credit of up to $15,950 is available for the tax year 2023.

16. **Annual Gift Tax Exclusion:**
– The Annual Gift Tax Exclusion sees an increase to $17,000.

Business Tax Updates:

1. **Corporate Transparency Act:**
– The Corporate Transparency Act introduces new beneficial ownership reporting requirements for certain entities, aiming to enhance transparency and combat financial crimes. More details can be found [here].

2. **S-Corp Reasonable Compensation:**
– The IRS is scrutinizing S-Corporations and shareholder-employee salaries. Ensuring “reasonable compensation” is vital for compliance. Learn more about navigating this issue [here].

Conclusion:

Staying informed about the 2024 tax changes is key to making informed financial decisions. Whether you’re an individual planning for retirement or a business owner navigating new reporting requirements, these updates will shape the fiscal landscape in the coming year. As always, consulting with a tax professional is recommended to ensure accurate and personalized advice based on your unique circumstances.

The Molen & Associates Difference

Mike Forsyth

“Super helpful and timely. This is our first year with them and we look forward to trusting them with our taxes and business books for years to come.”

Caitlin Daulong

“Molen & Associates is amazing! They run an incredibly streamlined process, which makes filing taxes a breeze. So impressed with their attention to detail, organization, and swift execution every year. Cannot recommend them enough!”

Sy Sahrai

“I’ve been with Mr. Molen’s company for few years and I felt treated like family respect and dignity. They are caring, professional and honest, which hard to find these days. Love working with them.”

Want to deduct your dog? Here’s how?

Three Ways to Deduct Your Dog, Cat, or Other Animal Expenses Owning a pet is often an expensive yet rewarding experience, with annual costs for dogs ranging from $1,270 to $2,800. While the love and companionship pets provide are invaluable, the IRS views their...

Claim $1600 Stimulus Check – IRS 2025 Rebate & Eligibility

As millions of Americans continue to grapple with financial challenges post-pandemic, questions surrounding the $1600 stimulus check, IRS 2025 payments, and the Recovery Rebate Credit are trending once again. Whether you missed out on a past stimulus payment or are...

Bookkeeper vs. Accountant: What’s the Difference?

Bookkeeper vs. Accountant: What's the Difference? Managing your business’s finances is essential for long-term success, but understanding the roles of a bookkeeper and an accountant can be confusing. In the debate of Bookkeeper vs. Accountant: What's the Difference?,...

How to Set Up Your IRS Online Account with ID.me (Step-by-Step Guide)

ID.me and the IRS Login System ID.me is a third-party identity verification service that the IRS uses to provide secure access to certain online tools and services. If you need to access your IRS account online, such as to view your tax records, get your transcripts,...

What Is the One Big Beautiful Bill Act? Key Tax Changes for 2025 and Beyond

Debt, Deductions, and Cuts: The Fiscal Impact of the One Big Beautiful Bill If you’re a taxpayer, business owner, or financial advisor, the “One Big Beautiful Bill Act” (OBBB) could impact your tax strategy in major ways. Passed by the House of Representatives in May...

5 Signs Your Business Needs Accounting Help

5 Signs Your Business Needs Accounting Help Running a successful business requires more than a great product or service—you need a solid handle on your finances. However, many small business owners and self-employed professionals find themselves overwhelmed by the...

Tax Implications: Employees vs. Contractors

Tax Implications: Employees vs. Contractors When growing your business, deciding whether to hire employees or engage independent contractors is a critical choice with significant tax implications. Understanding the difference between these two worker classifications...

Maximize Your QBI Deduction Before It’s Gone: Act Now!

Maximize Your QBI Deduction Before It’s Gone: Act Now! Introduced by the Tax Cuts and Jobs Act (TCJA), the Qualified Business Income (QBI) Deduction has become a cornerstone tax break for business owners. However, this valuable deduction is scheduled to sunset after...

Outsourced vs. In-House Bookkeeping: Which Is Best?

Outsourced vs. In-House Bookkeeping: Which Is Best? As a small business owner or self-employed professional, keeping accurate financial records is critical for managing cash flow, preparing taxes, and driving growth. When it comes to bookkeeping, you have two main...

Cash vs. Accrual Accounting: Which is Best for Your Business?

Cash vs. Accrual Accounting: Which Method is Right for Your Business? Choosing the right accounting method is one of the most important financial decisions a small business owner can make. Whether you’re just starting out or looking to refine your bookkeeping process,...

Request an Appointment Today

4 + 9 =

Call us at

Share This