IRS Reminds Taxpayers of ‘Significant Changes’ This Filing Season

The Internal Revenue Service (IRS) in Washington on Jan. 9, 2025. Madalina Vasiliu/The Epoch Times

The Internal Revenue Service (IRS) alerted taxpayers about updates implemented for the 2024 tax year that are applicable for the current filing season.

The deadline for filing 2024 returns is April 15.

“To avoid mistakes and potential processing delays, taxpayers should refrain from filing until they have received all necessary tax documents,” the agency said in a Feb. 19 statement. The IRS “encourages taxpayers to make essential preparations and be aware of significant changes that may affect their 2024 tax returns.” Major changes include higher tax credits, higher standard deductions, and increased contribution limits.

“The maximum Additional Child Tax Credit (ACTC) amount has increased to $1,700 for each qualifying child,” up from $1,600 in the 2023 tax year. ACTC is the refundable part of the Child Tax Credit (CTC) and is claimed by households with tax dues lower than their eligible CTC amount.

CTC gives credits to families with qualifying children—younger than 17 years at the end of 2024—allowing households to reduce their tax liability. For 2024, CTC is set at $2,000 per qualifying child. The credit amount will start phasing out when the adjusted gross income (AGI) per year exceeds $200,000.

In the 2023 tax year, individuals who adopted or began the adoption process qualified for Adoption Tax Credits to the tune of $15,950 per eligible child. For the 2024 tax year, this has been bumped up to $16,810.

“The amount begins to phase out if taxpayers have a modified AGI in excess of $252,150 and is completely phased out if their modified AGI is $292,150 or more.” Modified AGI refers to a taxpayer’s adjusted gross income after taking into account certain tax penalties and allowable deductions.

Apart from changes in tax credits, the standard deduction has been “increased for all filers,” the IRS said.

The standard deduction for single or married individuals filing separately is now $14,600, up from $13,850 from tax year 2023. This has been raised from $20,800 to $21,900 for heads of households, and from $27,700 to $29,200 for married couples filing jointly.

The IRA contribution limit for tax year 2024 has been increased to $7,000 from the previous $6,500. For individuals aged 50 and above, the limit has gone up from $7,500 to $8,000.

1099-K Reporting

The reporting threshold for Form 1099-K has changed for tax year 2024, the IRS said. The form is applicable to taxpayers engaged in gig work or casual online sales.

“Third-party settlement organizations (TPSOs), also known as payment apps and online marketplaces, are now required to report transactions when the amount of the total payments for those transactions in 2024 was more than $5,000,” the agency said.

Online marketplaces such as Amazon and payment apps like PayPal are required to prepare Form 1099-K and send copies to the taxpayer and the IRS. In 2023, these entities had to prepare the form if a taxpayer collected over $20,000 per year and carried out 200 transactions.

The threshold reduction to $5,000 is part of a plan to eventually bring down the limit to $600 which shall be applicable for 2026 and beyond.

Meanwhile, the IRS recently advised people to use the agency’s online tools to speed up the tax process.

For instance, when filing taxes, “skip the mail” and use online filing, the IRS said. “Approximately 93% of taxpayers file their federal income tax returns electronically, and most choose direct deposit to receive their refunds.”

“According to Treasury’s Bureau of the Fiscal Service, paper refund checks are 16 times more likely to have an issue, like the check being lost, misdirected, stolen or uncashed.”

People looking to get information about taxes can create an Individual Online Account with the agency and access details such as tax records, refund status, making or scheduling payments, and viewing and signing authorizations from their tax professional.

Taxpayers with queries should consider skipping the phone and use the IRS’s Interactive Tax Assistant (ITA) to get answers to tax questions related to their circumstances, the agency said.

“Based on input, ITA determines a person’s filing status, whether they should file a tax return, if someone is an eligible dependent, if a type of income is taxable, if a filer is eligible to claim a credit, if an expense is deductible and more.”