2024 Tax Season Tips and Updates: Avoid Costly Mistakes in 2024

Did you know that a few easy tax moves could save you hundreds, if not thousands, come tax season? With changes in tax brackets, an increase in the standard deduction, and some new IRS reporting rules, 2024 is shaping up to be a year with a few surprises—and some costly mistakes to avoid.

In this post, I’ll walk you through key steps to make sure you’re not leaving money on the table or getting caught off guard by the IRS. Whether you’re an experienced filer or just tackling taxes on your own for the first time, here’s a straightforward action plan to help you get organized before year-end.

Tax Brackets and Standard Deduction

Let’s start with the basics. Each year, the IRS adjusts tax brackets and the standard deduction for inflation, and 2024 is no different. Here’s what’s changed:

The New Standard Deduction:

• Single Filers: Now $14,600
• Married Filing Jointly: $29,200
• Head of Household: $21,900

That’s about a 5% increase from last year, meaning more of your income is not taxed. If you usually itemize deductions, don’t worry—those rules haven’t changed, so you can keep using your usual deductions.

Updated Tax Brackets

While tax rates are the same, income thresholds have shifted upwards by roughly 5%. For example, if you’re filing as single, the 22% tax rate now applies to income over $47,150. It’s a good idea to check where you fall in the new brackets, especially if you’re close to moving up to the next bracket.

Understanding Tax Brackets

Think of tax brackets as a series of buckets with different rates. As your income “fills” one bucket, the overflow spills into the next at a slightly higher rate. You’re only taxed on the income that falls within each bucket, not your entire income.

Example: If your income is $12,000, only the amount above $11,600 (the first bracket) spills into the next bracket and gets taxed at a higher rate.

The New 1099K Reporting Rules

A major change this year is the 1099K reporting threshold. Initially set to $600, the threshold is now delayed to $5,000. Here’s what this means:

• If you receive payments over $5,000 through platforms like PayPal, Venmo, or Cash App, you’ll get a 1099K form and need to report that income.

Zelle users won’t be affected by this change, as it’s not subject to 1099K reporting. Keep good records, as the IRS will see your gross income on the form, and you want to ensure you’re reporting your net income accurately.

Year-End Tax Moves to Save

As the year wraps up, here are five tax-savvy moves to consider:

1. Max Out Your Retirement Contributions
   If you have an IRA or a 401(k), consider maximizing your contributions. This not only reduces taxable income but builds up your retirement savings. If you’re 50 or older, take advantage of catch-up contributions.

2. Review Charitable Contributions
   Planning to donate? Do it before December 31st. Qualified donations reduce taxable income if you itemize.

3. Check Your Withholdings
   Had a raise, new job, or major life change? Adjusting your W4 with your employer now can help avoid a surprise tax bill.

4. Consider Tax Loss Harvesting
   If you have investments, look for losses to offset gains. This strategy, known as tax loss harvesting, helps lower taxable income.

5. Gather Your Records Early
   Start collecting tax documents like W2s, 1099s, and receipts. I find keeping everything in a “2024 Tax Documents” folder helps me stay organized and avoids last-minute stress.
   
   

A Heads-Up for 2025: The TCJA is Sunsetting

The Tax Cuts and Jobs Act (TCJA) brought valuable benefits like doubled standard deductions and lowered tax rates. However, it’s set to expire at the end of 2025. While this doesn’t impact your 2024 taxes, knowing about these changes can help with future planning.

For now, take advantage of TCJA benefits for 2024—especially if you’re close to retirement or looking to make the most of credits and deductions.

With a bit of planning, taxes don’t have to feel overwhelming. Taking even a few of these steps now can make a big difference in how much you owe and reduce stress when filing. Thanks for reading, and stay tuned for more tips to make tax season smoother and save you money!

Let me know if you have questions—I’m here to help you feel confident and prepared.