As millions of taxpayers gear up to file their returns, the Internal Revenue Service is reminding filers to be prepared and aware of “significant changes,” that may affect their 2024 tax returns.
The IRS recently released its annual “Tax Time Guide,” to inform taxpayers of important changes affecting certain filers this tax season.
While the tax filing season officially kicked off Jan. 27, filers have until April 15 to file.
Here’s what’s changed:
Updates to Additional Child Tax Credit for tax year 2024
The maximum Additional Child Tax Credit (ACTC) is increasing for the 2024 tax season to $1,700 for each qualifying child from $1,600 in 2023.
The IRS cannot issue refunds before mid-February 2025 when filers take this credit.
This applies to filers’ entire refund — not just one portion.
Standard deduction amount increase
Standard deduction amounts have increased for all filers.
Standard deductions refers to the specific dollar amount that reduces a taxpayers’ amount of taxable income.
The IRS typically adjusts the standard deduction each year for inflation.
The amount a filer qualifies for depends on filing status, whether the taxpayer is 65 or older, if the filer is blind and if another taxpayer can claim them as a dependent.
The new deductions are as follows:
- Single or married filing separately — $14,600
- Head of household — $21,900
- Married filing jointly or qualifying spouse — $29,200
Changes to the Earned Income Tax Credit
Taxpayers filing without a qualifying child must be at least 25 years of age but under the age of 65 by the end of 2024.
More information about the EITC can be found here.
Adoption Credit
If you adopted an eligible child in 2024, you can claim the Adoption Credit on your federal income taxes.
The Adoption Credit is up to $16,810 per eligible child in 2024 compared to the maximum of $15,950 per child in 2023.
Taxpayers who receive adoption benefits from their employer can also exclude up to $16,810 of those benefits from their income.
The credit is nonrefundable, so you can not get back more than you owe in taxes.
Clean Vehicle Credit
Filers report the Clean Vehicle Credit on Form 8936 and Schedule 3, line 6f.
Filers can check here for more information on the credit.
The IRS said it assists filers in determining whether the purchase of their electric vehicle or fuel cell vehicle is eligible for a tax credit.
Previously Owned Cleaned Vehicle Credit
This credit is available for previously owned clean vehicles acquired and placed in service after 2022.
This credit is offered to taxpayers who purchase qualifying electric vehicles or fuel cell vehicles from licensed dealers for $25,000 or less.
It is a nonrefundable credit, meaning you cannot get back more on the credit than you owe in taxes or apply excess credits to future tax years.
The credit typically equals 30% of the sale price and up to a maximum credit of $4,000. At the time of the sale, the seller must give you information about your vehicle’s qualifications.
Your vehicle must also be registered online by the seller and report that same information to the IRS. Otherwise, your vehicle will not be eligible for the credit.
More information can be found on Form 8936, Clean Vehicle Credit.
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