As the year comes to a close, it’s the perfect time to start thinking about your tax strategies for 2024. From recent tax law changes to the most effective deductions and answers to common tax questions, Polaris Tax & Accounting is here to help you make the most of this tax season. Below, we’ve outlined key tax-saving opportunities, top deductions, and frequently asked questions to guide you through the upcoming tax year.
2024 Federal Income Tax Brackets
The IRS has adjusted the income tax brackets for 2024 to account for inflation. Here are the updated brackets for single filers and married couples filing jointly:
| Tax Rate | Single Filers Income Range | Married Filing Jointly Income Range |
|---|---|---|
| 10% | Up to $11,600 | Up to $23,200 |
| 12% | $11,601 – $47,150 | $23,201 – $94,300 |
| 22% | $47,151 – $100,525 | $94,301 – $201,050 |
| 24% | $100,526 – $191,950 | $201,051 – $383,900 |
| 32% | $191,951 – $243,725 | $383,901 – $487,450 |
| 35% | $243,726 – $609,350 | $487,451 – $731,200 |
| 37% | Over $609,350 | Over $731,200 |
Source: IRS Provides Tax Inflation Adjustments for Tax Year 2024
Standard Deduction for 2024
The standard deduction amounts have increased for the 2024 tax year:
- Single Filers: $14,600
- Married Filing Jointly: $29,200
- Head of Household: $21,900
Source: IRS Provides Tax Inflation Adjustments for Tax Year 2024
Key Tax Updates and Deductions
- Retirement Contributions
- 401(k) Plans: The contribution limit for 2024 is $23,000 for individuals under 50, and $30,500 for those aged 50 and above.
- IRAs: The contribution limit remains at $7,000, with an additional $1,000 catch-up contribution for those 50 and older.
- Health Savings Accounts (HSAs)
- For individuals with self-only coverage under a high-deductible health plan, the contribution limit is $4,150. For family coverage, the limit is $8,300.
- Charitable Contributions
- Taxpayers can deduct qualified charitable contributions up to 60% of their adjusted gross income (AGI) if they itemize deductions.
- Medical Expense Deduction
- Unreimbursed medical expenses exceeding 7.5% of your AGI are deductible if you itemize.
Common Tax Questions
Q1: Should I Itemize Deductions or Take the Standard Deduction?
- Standard Deduction: A fixed dollar amount that reduces your taxable income. For 2024, it’s $14,600 for single filers and $29,200 for married couples filing jointly.
- Itemized Deductions: If your allowable expenses such as mortgage interest, state and local taxes, and charitable contributions exceed the standard deduction, itemizing may be beneficial.
Q2: Are There Any New Tax Credits for 2024?
- Clean Vehicle Credit: A credit of up to $7,500 is available for qualifying electric vehicles purchased in 2024. Income limits and vehicle eligibility criteria apply.
Q3: How Can I Maximize My Tax Refund?
- Contribute to Retirement Accounts: Maximize contributions to 401(k)s and IRAs to reduce taxable income.
- Review Tax Credits: Ensure eligibility for credits such as the Earned Income Tax Credit (EITC) and Child Tax Credit.
- Keep Accurate Records: Maintain documentation for all deductions and credits claimed.
End-of-Year Tax Planning Tips
- Review Withholdings
- Use the IRS Tax Withholding Estimator to ensure the correct amount is withheld from your paycheck, preventing unexpected tax bills.
- Plan Charitable Donations
- Consider making charitable contributions before year-end to maximize deductions.
How Polaris Tax & Accounting Can Help
Navigating tax changes, deductions, and end-of-year planning can be complex, but you don’t have to go it alone. Polaris Tax & Accounting is here to guide you every step of the way. Whether you’re self-employed, a small business owner, or simply looking to optimize your tax position, we’re ready to help you build a tax strategy that aligns with your financial goals.
If you’d like personalized tax planning or have questions about the information in this post, don’t hesitate to reach out.