What’s New This Tax Season?
Tax season is upon us, and while the core tax laws haven't undergone a massive overhaul this year, several key changes and updates could impact your return. At Callison CPA, we understand that tax preparation can be daunting. As a full-service CPA firm in Chattanooga, Tennessee, we're here to help businesses and individuals navigate these changes and maximize their savings. This blog post summarizes the important updates so you can be well-prepared before you file.
The Evolving Tax Landscape
While major legislative changes haven't occurred this year, it's crucial to remember that tax rules are constantly evolving. Inflation adjustments impact tax brackets and standard deductions, so it's essential to review these annually. Looking ahead, more significant changes might be on the horizon as Congress considers the future of the 2017 tax cuts, which are set to expire on December 31st. Staying informed is key to effective tax planning.
Streamlined IRS Services
The IRS has been actively working to improve the taxpayer experience. Enhanced online services offer added features and easier access to information, including refund status checks. These improvements aim to make the filing process less stressful and more efficient.
Key Updates for the 2024 Tax Season
Filing Deadline and Disaster Relief: The traditional tax deadline for most filers remains April 15th. However, exceptions exist, particularly for those residing in federally declared disaster areas. For instance, taxpayers in areas affected by natural disasters may qualify for filing and payment extensions. Furthermore, recent legislation allows victims of certain disasters from 2020 through 2024 to claim losses on their returns, even if they don't itemize, and removes the 10% AGI threshold for personal casualty losses. This could result in significant refunds for those impacted by such events.
1099-K Threshold Changes: A significant change for online sellers involves the 1099-K reporting threshold. Platforms like PayPal and eBay are now required to issue 1099-Ks to users with sales exceeding $5,000, down from the previous $20,000. This increased reporting requirement means more individuals will receive these forms, highlighting the importance of accurately reporting online income. Remember, whether you receive a 1099-K or not, all business income must be reported to the IRS. While selling personal items at a loss may not result in tax liability, any gains must be reported and taxed accordingly.
Enhanced Online Security with IP PINs: The IRS encourages taxpayers to create online accounts for secure access to information, including payment status, and obtaining an Identity Protection PIN (IP PIN). An IP PIN adds an extra layer of security, preventing fraudulent tax returns from being filed using your Social Security number. While beneficial, it's crucial to remember your IP PIN, as forgetting it can complicate the filing process.
Electric Vehicle Tax Credit Reporting: Many electric vehicle buyers utilize the point-of-sale $7,500 tax credit. However, it's still necessary to report the EV purchase on your tax return to substantiate eligibility. Failure to meet income requirements for the credit could result in a repayment obligation.
Increased Penalties for Underpayment: The IRS has noted a rise in penalties assessed for underpayment of estimated taxes. This often affects individuals with gig income or other earnings not subject to withholding. To avoid these penalties, which are currently set quarterly at 7%, it's crucial to pay estimated taxes on time or adjust your withholding.
Savings Bond Program Discontinued: The Treasury Department has discontinued the program allowing taxpayers to direct their refunds into savings bonds. However, you can still use Form 8888 to split your direct deposit refund between multiple accounts, including savings accounts, IRAs, or education savings accounts.
Your Partner in Tax Preparation
Navigating the complexities of the tax system can be challenging. At Callison CPA, we're dedicated to providing expert guidance and support to individuals and businesses in Chattanooga. Our team stays up-to-date on all the latest tax law changes and updates to ensure you receive the maximum deductions and credits you're entitled to. Contact us today to schedule a consultation and let us help you make this tax season as smooth and beneficial as possible. We're here to answer your questions and provide personalized solutions tailored to your specific needs.