As you prepare to file your 2024 tax returns in 2025, you may be in for some changes. Whether you’re tackling your taxes solo or working with a professional, understanding what’s new this tax season can help you avoid surprises. Because there is no such thing as a good tax surprise.
Who Should Prepare Your Tax Return?
Before diving into your return, first consider where you’ll be filing from. If you’ve had a major life change—such as buying or selling a home, inheriting assets, or getting married—these events can significantly impact your tax situation. In such cases, seeking guidance from a tax professional can help ensure everything is reported correctly and that you maximize deductions and credits.
If your financial situation has remained steady, you might consider preparing your taxes yourself. However, keep in mind that the IRS estimates the average tax filer spends about 13 hours preparing their return. If that’s time you’d rather spend elsewhere, an experienced tax professional can be a valuable resource.
Beware of Scams—The IRS Recommends a Trusted Professional
Each year, tax scams become more sophisticated. The IRS strongly urges taxpayers to use a reputable tax professional to avoid falling victim to fraudulent preparers or misleading tax schemes. If you choose to file your own return, make sure you are using legitimate tax software or IRS-approved filing options.
New IRS Direct File and Free File Options
The IRS has expanded its Direct File program—a free option that allows eligible taxpayers to file their returns directly on the IRS website. Previously available in 12 states, it’s now expanded to 25 states. However, if you have self-employment income or need to file a Schedule C, this option is not available to you.
For those with simple returns—typically just a W-2 and minimal investment income—Free File options are available through various providers. But be cautious: not all “free” services are truly free. Some national tax prep companies have faced scrutiny for deceptive advertising that lures filers in with a “free” option, only to hit them with hidden fees. Always read the fine print.
Key Tax Changes for 2024 Returns
Tax laws adjust annually, and this year brings a mix of inflation-based changes and new reporting requirements. Here are five key updates:
1. Child Tax Credit (CTC) Adjustments
- The maximum Child Tax Credit remains $2,000 per qualifying child under 17.
- However, the refundable portion has increased from $1,600 to $1,700—helping lower-income families receive a larger refund.
- The credit phases out for single filers earning over $200,000 and joint filers over $400,000.
- No advance payments will be issued—families must claim it when they file.
2. Lower 1099-K Reporting Threshold
If you use payment platforms like Venmo, PayPal, or eBay to accept payments for goods or services, you might receive a 1099-K tax form for 2024. The reporting threshold has dropped from $20,000 and 200 transactions to just $5,000, with plans to lower it further in future years.
- If you receive a 1099-K, verify the amounts carefully.
- If there are discrepancies, contact the payment platform immediately.
- Maryland & Virginia reporting threshold is $600 with no minimum transactions
3. Inflation-Adjusted Tax Brackets
Federal income tax brackets are adjusted annually for inflation, meaning you could fall into a higher or lower bracket even if your income remained relatively the same. The good news? The tax brackets are slightly more favorable this year, which may lower your overall tax liability.
4. Higher Standard Deduction
The standard deduction—claimed by most taxpayers—has increased due to inflation adjustments:
- Single filers: $14,600 (up from $13,850)
- Married filing jointly: $29,200 (up from $27,700)
- Heads of household: $21,900 (up from $20,800)
- Extra deduction for those 65+: An additional $1,850 per person
These higher deductions may reduce your taxable income, making it less likely you be able to itemize deductions.
5. Disaster Relief Extensions
The U.S. experienced multiple natural disasters in 2024, from hurricanes to wildfires, resulting in significant losses. If you were affected by a federally declared disaster, you may qualify for an extended tax deadline without penalties. This relief can provide extra time to gather records, file returns, and manage tax obligations while recovering.
As always, start early and don’t wait until the last minute. Tax season is here, and knowing the latest updates can help ensure a smoother filing experience.
To engage with a professional tax preparation firm, contact Saunders Tax & Accounting at www.SaundersTax.com or call us at 301-714-2071. Open Monday – Friday 9 am to 9 pm and Saturdays 9 am to 3 pm except for Feb 22, and Mar 22 when the hours are 9 am to Noon. Awarded the Hagerstown Chamber of Commerce “2023 Small Business of the Year” and Hagerstown Hotlist 2024, we have been providing a Less Taxing Life and More Prosperous Solutions since 1984!
