Tax Considerations To Keep In Mind For the 2024 Tax Season
January 25, 2024
As we embark on a new year, it's crucial to stay informed and prepared for the upcoming tax season.
The 2024 tax year brings with it a host of considerations, both from the remnants of 2023 and the anticipation of changes in the year ahead.
Tying up Loose Ends for Tax Year 2023
Although 2023 is over, there are still considerations for the tax year that may apply.
Estimated Taxes. You are required to pay taxes on the income you anticipate earning throughout the year. Oftentimes, this is handled through an employer's tax withholdings and can be adjusted by completing a W-4 form. You'll want to make sure that your employer is withholding enough to avoid the estimated tax penalty.
The deadline for the last 2023 estimated tax payment is January 16, 2024.
Irrevocable Trusts. A fiduciary of a trust or estate can elect to treat all, or any part, of a distribution made within the first 65 days of a new tax year as having been made in the previous tax year.
The 65-day deadline applicable to the 2023 tax year is Tuesday, March 5, 2024.
IRA Contribution Deadline. Many people have a goal to “max” out their IRA contributions each year. If you haven’t done so already, there’s still time. The limit is $6,500 for those under the age of 50 and $7,000 for those older.
The last day to make IRA contributions for the year 2023 is April 15, 2024.
Looking Forward to Tax Year 2024
Start Date. You can begin filing tax individual tax returns on January 29, 2024. If your situation is simple and straightforward, you may be able to file your taxes on this date, but many might find themselves waiting for tax documents to be ready.
Deadline. Tax returns and payments are due on April 15, 2024, although you might want to confirm whether your resident state has a holiday that could impact this date. This date is also when extension requests are due, so that you can postpone filing your return until October 15, 2024. An extension to file the return does not mean that you are able to delay payment of taxes owed.
Tax Brackets. Every year, tax brackets are adjusted due to inflation, and those for 2024 can be found here.
Standard Deduction. Before preparing your return, determine whether it's worthwhile to itemize each and every deduction, or if you should just take the blanket standard. Like tax brackets, the standard deduction gets an inflation adjustment (see link above). If you were on the cusp last year, check to see whether the increased amount in the standard deduction would do away with the need to itemize.
IRAs. Contribution and income limits for IRAs have been raised, as is the case every year. For 2024, the contribution limit is $7,000 for those under the age of 50 and $8,000 for those older.
Gift Tax. The Federal annual gift tax exclusion is a set amount that you may give someone without having gift tax implications or tax filing requirements. In 2024, you can give up to $18,000 to someone in a year without having to deal with the IRS. The lifetime gift tax exemption amount, unified with the estate tax, is $13.61M for this year.
Remember to revisit your tax strategies regularly, especially in light of ever-evolving tax laws and economic factors.
Whether you're adjusting withholdings, contemplating IRA contributions, or exploring deductions, each step you take can significantly impact your financial health.
We encourage you to use this guide as a quick resource and to seek professional advice tailored to your unique circumstances. Here's to a financially savvy and tax-efficient year ahead!