2024 Tax Season Updates and Tips

1
Apr

2024 Tax Season Updates and Tips

Filing your 2024 taxes can be simple when you’re prepared. When you understand recent changes in tax laws to determine which tax credits and deductions you’re eligible to take.

The end of the 2024 tax season for most Americans is April 15, 2024, so if you still need to file 2023 taxes, take notice of these credits and deductions to help make filing your taxes more straightforward.

The earned income tax credit

If you worked or were self-employed and had earned income under $63,698, you could receive the Earned Income Tax Credit (EITC) by filing a tax return. For 2023, the credit ranges from $600 to $7,430, depending on how many kids you have and your marital status. If you are eligible for this credit, the maximum amount you could receive is:

  • $600 if you have no dependent children
  • $3,995 if you have one qualifying child
  • $6,604 if you have two qualifying children
  • $7,430 if you have three or more qualifying children

The 2024 tax season child tax credit (CTC)

The CTC is a maximum of $2,000 per qualifying child under age 17. Up to $1,500 is refundable. However, you must have earned over $2,500 to be eligible for the CTC.

Student loan interest deduction

This deduction allows student loan borrowers to write off up to $2,500 from their taxable income if they paid interest on their student loans. This deduction is taken above the line, subtracting it from your taxable income.

Note that student loan interest is deductible if your modified adjusted gross income (MAJI) is less than $70,000 ($145,000 if filing jointly). If your MAGI was between $70,000 and $85,000 ($175,000 if filing jointly), you can deduct less than the maximum allowed $2,500.

The American Opportunity Tax Credit (AOC)

The AOC lets you claim the first $2,000 you spent on tuition, books, equipment, and school fees, plus 25% of the next $2000 for a total of $2500 but doesn’t allow for living expenses or transportation.

Lifetime Learning Credit

This credit allows you to deduct 20% of the first $10,000 you paid toward tuition, fees, books, and supplies related to coursework for a maximum of $2,000. However, the lifetime learning credit doesn’t count living expenses or transportation as eligible expenses.

Mortgage interest deduction

The mortgage interest tax deduction aims to make homeownership more affordable. It cuts the federal income tax qualifying homeowners pay by reducing their taxable income by the mortgage interest they pay. Collect a Form 1098 from your mortgage lender and work with your tax professional to determine the amount of interest you may deduct.

Saver’s Credit

The saver’s credit is between 10% to 50% in contributions made into an IRA, 401(k), 403(b), or specific retirement plans, up to $2000 ($4000 if filing jointly). The 2024 tax season percentage depends on your filing status and income, so be sure to visit with a tax professional to understand this credit fully.

There are other credits and deductions you may be eligible to take, such as:

  • Educator Expenses deduction
  • Electric Vehicle Tax Credit
  • Solar Tax Credit
  • Self-employment expenses

You must work with a tax professional to ensure you understand what credits and deductions you’re eligible to take. Next, once you have your 2024 tax season statements, it’s time to file your tax return.

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