As the 2025 tax filing season begins, the IRS encourages taxpayers to stay informed about significant changes that could impact their 2024 tax returns. This guide provides an in-depth overview of updated tax rules, key deadlines, and free filing resources to help ensure an accurate and timely return.
Tax Filing Deadlines for 2024 Returns
- April 15, 2025: Deadline for submitting Form 1040 and Form 1040-SR.
- Ensure you have all necessary tax documents before filing to avoid processing delays.
- Create an IRS Online Account for secure access to your tax records and payment history.
- If your ITIN (Individual Taxpayer Identification Number) has expired, renew it promptly to avoid delays.
Key Tax Changes for 2024
1. Additional Child Tax Credit (ACTC)
- Increased to $1,700 per qualifying child.
- Bona fide residents of Puerto Rico with at least one qualifying child are now eligible.
- Refunds for ACTC claims will not be issued before mid-February 2025.
2. Standard Deduction Increases
| Filing Status | 2024 Standard Deduction |
|---|---|
| Single or Married Filing Separately | $14,600 |
| Head of Household | $21,900 |
| Married Filing Jointly or Surviving Spouse | $29,200 |
3. Child Tax Credit (CTC) Enhancements
- $2,000 per qualifying child.
- Begins to phase out for AGI exceeding $200,000 ($400,000 for joint filers).
- Applies to children under 17 years old as of December 31, 2024.
4. Earned Income Tax Credit (EITC) Updates
- Available to taxpayers aged 25-64 (at least one spouse must meet age criteria for joint filers).
- For more information, refer to Instructions for Schedule 8812.
5. Adoption Credit
- Increased to $16,810 per eligible child.
- Phases out for AGI above $252,150, completely phased out at $292,150.
- Use Form 8839 for claiming the credit.
6. Clean Vehicle Credit Updates
- Available for new and used clean vehicles.
- Use Form 8936 to claim the credit.
7. IRA Contribution Limit Increase
- $7,000 limit ($8,000 for individuals aged 50+), up from $6,500 ($7,500 for 50+).
8. Changes to 1099-K Reporting Requirements
- New $5,000 threshold for third-party payment networks (e.g., PayPal, Venmo).
- For more details, review Notice 2024-85.
Tax Planning Strategies for 2024
1. Maximize Retirement Contributions
- Contribute to 401(k) plans, IRAs, and HSAs to reduce taxable income.
- Consider Roth conversions for tax-free withdrawals in retirement.
2. Harvest Capital Losses
- Offset capital gains by selling underperforming investments.
- Deduct up to $3,000 in losses against ordinary income.
3. Utilize Flexible Spending Accounts (FSAs)
- Use FSAs and HSAs for tax-free medical expenses.
- Check employer contribution deadlines.
4. Defer Income & Accelerate Deductions
- Postpone end-of-year bonuses to reduce 2024 taxable income.
- Prepay deductible expenses such as mortgage interest and property taxes.
Common IRS Audit Triggers & How to Avoid Them
1. High Income Discrepancies
- Report all income sources to match IRS records.
2. Excessive Business Deductions
- Avoid inflating home office, travel, or meal expenses.
3. Claiming Too Many Charitable Donations
- Keep receipts for cash and non-cash donations.
4. Large Cash Transactions
- Report any cash deposits over $10,000 to the IRS.
Maximizing Tax Benefits: Deductions & Credits
Home Office Deduction
- Self-employed individuals can claim home office expenses.
- Calculate based on square footage or actual expenses.
Education Credits
- American Opportunity Credit: Up to $2,500 per student.
- Lifetime Learning Credit: 20% of tuition costs up to $10,000.
Medical and Dental Deductions
- If total medical expenses exceed 7.5% of adjusted gross income (AGI), they can be deducted.
Charitable Contributions
- Donations to qualified charities are deductible.
- Keep receipts for cash donations over $250.
Student Loan Interest Deduction
- Deduct up to $2,500 in student loan interest.
- Phases out for higher income brackets.
Free IRS Filing Options
1. IRS Free File
- Offers brand-name tax software for eligible taxpayers.
- Check IRS Free File to see if you qualify.
2. Direct File
- IRS online filing tool for simple tax returns in select states.
- Learn More About Direct File.
3. MilTax for Military Personnel
- Free tax preparation and electronic filing service.
- Covers deployments, multi-state filings, and military-specific tax situations.
- Access MilTax.
4. VITA & TCE Programs
- Free tax return assistance for low-income and elderly taxpayers.
- Find a VITA or TCE site near you.
Conclusion
Staying informed about tax changes ensures a smooth filing process. Utilize free IRS resources and tools to maximize deductions and credits while avoiding errors. For detailed guidance, refer to Publication 17 and visit IRS.gov for updates.
Stay prepared and file your taxes with confidence!
