Skip to main content

Natural Awakenings Westchester / Putnam / Dutchess New York

Key Tax Updates For 2024

Nov 29, 2024 09:31AM ● By Ellen Rose, CPA

By fizkeson AdopbeStock

Rates have remained unchanged since the 2018 Tax Act; however, the income thresholds for each tax bracket have increased to account for inflation. To determine which tax bracket one’s income falls into, individuals can easily search for the updated 2024 brackets, as these thresholds are adjusted every year.

Taxpayers may be surprised this year to receive a 1099-K form from payment processors like Zelle, Venmo or PayPal, particularly if they used these platforms to sell personal items or receive reimbursements for shared expenses, such as meals with friends. The 1099-K is now required to report any income over $5,000, although some processors will report income over $600 starting in 2025. For the 2024 tax year, however, the reporting threshold is flexible, either $600 or $5,000, depending on the processor. It’s important to note that personal reimbursements are not taxable, and personal items sold at a loss are also not taxable. Properly reporting this information on tax returns is essential, and tax software can guide users in making the correct entries to avoid unnecessary tax liabilities.

The Inflation Reduction Act introduced several valuable tax credits, including a simplified electric vehicle credit of up to $7,500. However, income limitations must be considered when claiming this credit. Additionally, the Energy Efficient Home Improvement Credit has been expanded to cover up to 30 percent of the costs for home insulation, windows and skylights, central AC, exterior doors, heat pumps and heat pump water heaters. This is in addition to the already available Residential Clean Energy Credit for solar energy installations.

For small businesses, the 100 percent bonus depreciation deduction will decrease this year to 60 percent and will continue to decline by 20 percent annually until it is phased out. In 2023, the bonus deduction was 80 percent. Despite this reduction, the Section 179 depreciation deduction remains a valuable option for small businesses looking to achieve a 100 percent deduction.

The most effective way to minimize taxes is through proactive planning, which includes consulting with a qualified tax advisor. Tax laws change every year, and failing to stay informed can result in higher tax liabilities. Given the current uncertainties around the economy and inflation, even those that have never worked with a tax professional might find it beneficial to do so. A tax advisor can help make informed decisions in the face of evolving financial challenges.

A Certified Public Accountant (CPA) is a professional available year-round to offer guidance and advice, which can be especially valuable for individuals facing significant financial decisions. Most people would benefit from the expertise of a CPA, ensuring that they make the best choices and minimize their tax burdens.

Ellen Rose is a Certified Public Accountant with more than 25 years’ experience. Her expertise includes personal tax return preparation, business tax return preparation, tax planning and IRS and state tax resolutions services. She is the co-founder of Sternbach & Rose, CPAs, a full-service accounting firm located at 115 E. Stevens Ave., Ste. 100, in Valhalla. For more information or to make an appointment for a free initial consultation to see if a fit is suitable, call 914-940-4449, email [email protected] or visit SandRcpa.com.

STERNBACH  ROSE CPAS - 115 E Stevens Avenue Suite 100 Valhalla NY

STERNBACH & ROSE, CPAS - 115 E Stevens Avenue, Suite 100, Valhalla, NY

ACCOUNTING/TAX SERVICESOur goal is to help people have less anxiety about managing their finances, to maximize their income and run their businesses better. Giving people a stronger finan... Read More »