2024 Taxes: Tips for Filing and Important Changes

Tax time is here again, and if you’re not one of the 25 million Americans who have already filed, then you’re probably going through the process of gathering what you need and preparing to file.

While you’re working through your tax season checklist, here are some updates and tips to help you along the way:

2024 Taxes Filing Date

As usual, the deadline to file federal tax returns for most taxpayers is Monday, April 15, 2024. However, taxpayers in Maine or Massachusetts may file up until Wednesday, April 17, 2024, due to the Patriot’s Day and Emancipation Day holidays.

Standard and Itemized Deduction for 2024 Taxes

For the 2023 tax year, the standard deduction increased to $27,700 for  married filing jointly,$13,850 for single filers and married filing separately, and $20,800 for heads of household. About 90 percent of taxpayers take the standard deduction because it results in a higher deduction than if they itemize. 

That being said, it does make sense for some filers to itemize their deductions, so make sure you calculate your itemized deduction before you choose which one to take.

The Child Tax Credit and Potential Changes

The 2023 child tax credit is capped at a refundable amount of $1,600 – for now. There is currently a bill pending Senate approval that would expand that credit to $1,800 for 2023, $1,900 for 2024 and $2,000 for 2025. 

Even if the bill passes the Senate, eligibility will remain the same: You must have a modified adjusted gross income, or MAGI, of $200,000 or less, or $400,000 or less if you’re filing jointly. And you can only claim a child tax credit for children under the age of 17 as of Dec. 31, 2023.

If the bill becomes law, the IRS said the funds could be issued within six to 12 weeks of the bill’s passing. 

The Child and Dependent Care Credit

The child and dependent care credit, which is different from the child tax credit, covers a percentage of daycare and other qualified costs for a child under 13, or other dependents who require care. Typically, qualified taxpayers can receive up to 35 percent of $3,000 in expenses for one dependent, or $6,000 for two or more dependents.

In 2023, if your AGI was over $43,000, you could take 20% of the credit. There is no income cap for this credit. If you had a maxed-out dependent care FSA (flexible spending account), however, then you are ineligible for this credit. See more information on the IRS website here

Solar Panel Tax Credit Extension: 2024 Taxes

The Federal Residential Clean Energy Property Credit, also known as the solar panel tax credit, allows taxpayers to claim a percentage of the cost of qualified clean energy property they installed during that tax year, like solar electric panels, solar water heaters and geothermal heat pumps.

This solar panel tax credit reduces how much you owe in income taxes based on how much you paid for your qualifying solar panel or clean energy system. 

Recently, Congress extended this credit through 2034. For 2022-2032, the credit is at 30 percent of the cost of installation. That number will decrease to 26 percent for 2033, 22 percent for 2034, and it will expire in 2035 unless Congress renews it.

There is no maximum limit for how much can be claimed. Only solar roofing tiles or solar roofing shingles apply. You can learn more about the Federal Residential Clean Energy Property Credit here.

Electric Vehicle Tax Credit

If you purchase a new plug-in electric vehicle (EV) or fuel cell vehicle (FCV) during or after 2023, you may qualify for the clean vehicle tax credit. This credit is up to $7,500, and is set to expire in 2032 unless renewed. There could be partial credits depending on when the vehicle was placed in service or the final purchase was made – see the IRS page for more details.

This credit is available for both individuals and their businesses.

There are some qualifications, including: 

  • You must use the vehicle for your own use;
  • Your adjusted gross income must not exceed $300,000 for married couples filing jointly, $225,000 for heads of households, or $150,000 for all other filers. (You can use your modified AGI from the year you purchase the vehicle or the year before, whichever is less;)
  • You must purchase the vehicle new;
  • The vehicle must be made by a qualified manufacturer;
  • The vehicle’s suggested retail price (MSRP) cannot exceed $80,000 for vans, sport utility vehicles and pickup trucks, or $55,000 for other vehicles. For example, a 2024 Tesla Model Y would technically apply for this credit right now, but a Tesla Model S or Model X would not, due to the vehicle’s MSRP.

About Your Richest Life

At Your Richest Life, Katie Brewer, CFP®, believes you too should have access to financial resources and fee-only financial planning. For more information on the services offered, contact Katie today.

The post 2024 Taxes: Tips for Filing and Important Changes appeared first on Your Richest Life.

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