Navigating Tax Season 2024 -- What's New and What to Keep in Mind

As another tax season rolls around, taxpayers brace themselves for the annual ritual of filing taxes. However, each year brings its own set of changes, updates, and considerations. Tax laws evolve, deductions shift, and new regulations emerge, making it crucial for taxpayers to stay informed. In this article, we'll explore what's new and what to keep in mind when filing taxes in 2024.

Changes in Tax Laws

Stay updated on any changes in tax laws that might affect your filing status, deductions, or credits. The IRS regularly updates its guidelines, so it's essential to review the latest publications or consult with a tax professional.

Specifically for the year 2023, the standard deduction amounts have been changed to account for high inflation. The standard deduction for Married Filing Jointly has been increased by $1800 to a new total of $27,700. For those filing as Single or Married Filing Single, the standard deduction has increased by $900 to a new total of $13,850. For those filing as Head of Household, the standard deduction has increased by $1,400 to a new total of $20,800.

In 2024, there might be changes to tax rates, income thresholds, and eligibility criteria for various deductions and credits. Pay attention to these updates to ensure accurate filing.

COVID-19 Related Provisions:

The COVID-19 pandemic has led to several tax-related provisions in recent years. Keep an eye out for any extensions, credits, or relief measures introduced by the government in response to the pandemic.

For example, certain COVID-19 relief programs might impact your eligibility for deductions or credits. Stay informed about how these provisions affect your tax situation.

Remote Work and State Taxes:

With the rise of remote work arrangements, many individuals have found themselves working from states outside their usual place of employment. This can have implications for state taxes.

If you've been working remotely from a different state, you may be subject to tax obligations in both your resident state and the state where you work remotely. Review the specific tax laws and regulations for each state to avoid any surprises.

For Special Catch-Up Contribution

According to IRS.gov, Under the special 403(b) catch-up, employees of a qualified organization may contribute an increased dollar amount under IRC Section 402(g)(1) if they've completed at least 15 years of service with the organization. This special 403(b) catch-up is the least of:

$3,000;
$15,000, reduced by the sum of:

amounts not included in gross income for prior taxable years by reason of this special 403(b) catch-up and
the aggregate amount of designated Roth contributions (per IRC Section 402A(c)) permitted for prior taxable years by reason of this special 403(b) catch-up; or

$5,000 multiplied by the employee's years of service with the qualified employer, less all elective deferrals the employee made in prior years to the organization's plans. Elective deferrals include those made to a 401(k) plan, SARSEP, SIMPLE IRA, or 403(b) plan maintained by the organization.

As indicated above, the special 403(b) catch-up formula imposes a lifetime limit of $15,000 of elective deferrals.

See IRC Sections 402(g)(1), 401(g)(3) and 402(g)(7) and Treas. Reg. §1.403(b)-4(c)(3).

Clergy Housing Allowance

You can exclude the clergy housing allowance that has been previously designated from your federal taxable income if you are an ordained minister that owns or rents your home. Items like your mortgage or rent payments, taxes, home repairs, insurance, furnishings, and utilities can be used to reduce your federal taxable income.

Given the unique nature and specificity of the housing allowance, you may want to seek advice from a tax professional who is well versed in clergy taxes to take advantage of the housing allowance provision.

Documentation and Record-Keeping:

Proper documentation is crucial when filing taxes. Keep organized records of income, expenses, deductions, and credits throughout the year.

Maintain records for any deductions or credits you plan to claim, such as receipts, invoices, and bank statements. This will help support your tax return in case of an audit.

As you prepare to file your taxes in 2024, it's essential to stay informed about the latest updates, changes in tax laws, and important considerations. By staying organized, keeping accurate records, and understanding your tax obligations, you can navigate tax season with confidence and ensure compliance with IRS regulations. We also recommend seeking assistance from a tax professional knowledgeable in clergy taxes. Being proactive and informed will contribute to a smooth tax-filing experience.

The information contained herein is for informational purposes only. The information does not constitute any financial, insurance, investment, legal, or tax advice. MMBB is not liable for any success or failure that is directly or indirectly related to the use of the information contained herein.