What You Need To Know for the 2024 Tax Season About Credits, Deductions, and Policies

The 2024 tax season is approaching, so be prepared for any changes that could affect your return. As credits, deductions, and tax laws change frequently, it pays to plan ahead to get all the tax breaks you deserve and take advantage of deductions and credits you qualify to receive.

Standard Deduction Changes for 2024

Each year, the IRS adjusts the standard deduction¹ to account for inflation. For the 2024 tax season, the standard deduction increased:

• Single Filers: $14,600 (up from $13,850 in 2023)
• Married Filing Jointly: $29,200 (up from $27,700 in 2023)
• Head of Household: $21,900 (up from $20,800 in 2023)

If you don’t itemize deductions, the standard deduction lets you subtract this amount from your taxable income.

Key Tax Credits To Consider

Tax credits directly decrease your tax bill, which is a great way to lower your taxes. These are some important credits you should know about for the 2024 tax season:

• Earned Income Tax Credit (EITC): As a tax credit available for those with a lower or moderate income, the EITC is a great help. The total credit per family of three or more children is $7,830 in 2024.²
• Child Tax Credit (CTC): The Child Tax Credit is still $2,000 per eligible child under 17 for the tax year 2024, up to $1,500 of which is refundable.³
• American Opportunity Tax Credit (AOTC): This tax credit is up to $2,500 per qualifying student during the first four years of college. Up to 40% of this credit ($1,000) is refunded.⁴
• Lifetime Learning Credit (LLC): The LLC offers up to $2,000 per return on qualified educational expenses, and the number of years you could get a credit is unlimited.⁵

Tax Benefits To Save on Your Tax Return

The more deductions you have, the less you’ll owe in taxes. Some preliminary 2024 deductions include:

• Retirement Funds: If you contribute to a retirement fund, such as a 401(k), IRA, or SEP IRA, it helps prepare for your retirement and may save you money. The contribution limits for 2024 are $23,000 in 401(k) accounts (or $30,000 if you are 50 or older) and $7,000 in IRA accounts (or $8,000 if you are 50 or older).⁶
• Medical Expenses: If you have a significant medical bill, medical expenses over 7.5% of your adjusted gross income (AGI) are tax-deductible.⁷
• Donations to Charities: You may still deduct cash or property donations you make to qualified charities if you itemize (for cash donations up to 60% of your AGI and up to 30% of your AGI for assets that have appreciated, such as stock), so retain receipts of all contributions.⁸

New or Revised Policies for the Tax Year 2024

Every tax season, you might see new rules or modifications to the IRS forms. Here’s what’s new or different in 2024:

• Energy Efficiency and Clean Energy Tax Credits: If you’ve retrofitted your house to save energy by installing solar panels or energy-efficient windows, you might qualify for a credit. The Residential Clean Energy Credit is still 30% for some improvements.⁹
• Tax Credit for Electric Vehicle (EV): The EV tax credit of up to $7,500 is still available in 2024 on eligible electric vehicles. Check to see if the IRS’s rules cover the vehicle you are purchasing before filing and using this credit.¹⁰
• Bonus Depreciation: The business bonus depreciation rate is 60% for qualified assets put into service during 2024. Make sure you remember this when making big business purchases.¹¹

Try Professional Support for Difficult Cases

Suppose your financial picture is more complex (if you have a business, have multiple investments, or recently underwent a major life transition). In that case, a tax professional may help with your return because it is their job to be familiar with the most recent regulations. A tax professional may also inform you about deductions and credits you didn’t know existed.

Important Disclosures:

Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.

 This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

 All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking #663998

Footnotes

¹ Standard Deduction
https://www.irs.gov/publications/p505

² Earned Income Tax Credit
https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income-and-earned-income-tax-credit-eitc-tables

³ Child Tax Credit
https://www.irs.gov/credits-deductions/individuals/child-tax-credit

⁴ American Opportunity Tax Credit
https://www.irs.gov/credits-deductions/individuals/aotc

⁵ Lifetime Learning Credit
https://www.irs.gov/credits-deductions/individuals/llc

⁶ Retirement Funds Contribution Limits
https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000

⁷ Medical Expenses
https://www.irs.gov/taxtopics/tc502

⁸ Charity Donations Deduction Limits
https://www.investopedia.com/articles/personal-finance/041315/tips-charitable-contributions-limits-and-taxes.asp

⁹ Residential Clean Energy Credit
https://www.irs.gov/credits-deductions/residential-clean-energy-credit

¹⁰ Tax Credit for Electric Vehicle
https://www.irs.gov/clean-vehicle-tax-credits

¹¹ Bonus Depreciation Rates
https://www.investopedia.com/terms/b/bonusdepreciation.asp