Welcome to the Tax E Man Blog. Tax E Man, along with the website, PatTax.net, are provided by Baldwin, NY Tax Preparation Service Pat Tax Inc and Enrolled Agent Patrick White.

The Tax E Man Blog has 2 parts. part 1 provides a brief topic overview. Part 2 is accessed by clicking embedded links which provide more in-depth topic information.

 

2024 Tax Highlights

This year has not seen major changes to federal tax law. However, two significant acts—the SECURE Act 2.0 and the Inflation Reduction Act—continue to influence various provisions.

Energy Credits for Vehicles

If you purchased a qualifying clean vehicle in 2024, you may be eligible for a nonrefundable credit up to $7,500 for a new vehicle, or $4,000 for a used one. Various costs, content, and income requirements must be met. A “time of sale” report from the dealer is needed to claim the credit, which can be transferred to the dealer for a reduced purchase price.

Energy Credits for Home Improvements

Homeowners making energy-efficient improvements can qualify for annual tax credits up to $3,200, with the lifetime limit removed. The Energy Efficient Home Improvement Credit covers 30% of expenses such as doors, windows, insulation, and audits. The Residential Clean Energy Credit also covers 30% of expenses for solar, wind, and geothermal systems. Both credits require manufacturer certification.

 

Read Tax Highlights-Deeper Dive Here

 

Form 1099-K

You may receive a Form 1099-K for accepting payment cards or third-party network payments if transactions exceed $5,000 in 2024.

Premium Tax Credit

If you or a family member enrolled in health insurance through the Marketplace and received advance payments of the Premium Tax Credit, you must file Form 8962 with your return. The Marketplace will send Form 1095-A by January 31, 2025, listing necessary information. Failure to include Form 8962 may result in return rejection or refund delays.

Student Loan Forgiveness

Debt forgiveness is usually taxable, but student loan forgiveness from 2021 to 2025 is generally not federally taxable unless services were provided to the discharging lender. State laws may vary.

 

Read Tax Highlights-Deeper Dive Here

 

Year-End Tax Planning

Strategies for year-end tax planning include maximizing retirement plan contributions, gains and losses from investments, and charitable contributions. You can make IRA and HSA contributions for 2024 until April 15, 2025.

IRA and HSA

For 2024, you can contribute up to $7,000 ($8,000 if age 50 or older) to an IRA, with contributions deductible on your tax return. HSA contributions also offer deductions, with limits ranging from $4,150 to $10,300 based on coverage type and age.

IRS Focus Areas

The IRS continues to emphasize foreign asset reporting and digital assets. Severe penalties apply for failing to report foreign assets. Digital assets like NFTs and cryptocurrencies are taxable and must be reported.

 

Read Tax Highlights-Deeper Dive Here

 

Unreported Income

All income needs to be declared on your tax return to avoid penalties. This includes extra money earned through side jobs such as ridesharing, selling crafts, delivering meals, dog-walking, or renting out property via an online rental company. Foreign income, barter income, and other earned income must be reported, even if not documented on Form 1099.

Federal and State Tax Differences

Remember, state tax laws can differ from federal ones. Ensure you provide all income and expenses to your tax preparer to maximize benefits on your state return.

 

The information provided in the 2024 Tax Highlights is for informational purposes only and should not be considered as tax advice. We strongly recommend consulting with your tax professional before acting on any of the information presented here.