Let’s get started.
ELECTRIC VEHICLES
Eligible buyers of qualifying EVs can opt to monetize the up to $7,500 credit, starting in 2024, by transferring it to the dealer at the time of purchase, thus lowering the amount the buyer pays for the car. Buyers can otherwise elect to claim the break on their federal tax return that they will file in the subsequent year. Guidance from the Service requires auto dealers to register on IRS’s online tool, IRS Energy Credits Online, to receive advance credit payments from eligible EV sales. Buyers who opt for the advance credit to lower the cost of the car will have to repay it when filing their 1040 if their modified AGI exceeds the limit for taking the credit.
ADOPTION
The adoption credit is taken on up to $16,810 of qualified expenses in 2024. The full credit is available for a special-needs adoption even if it costs less. The credit phases out for filers with modified AGIs over $252,150 and ends at $292,150.
HEALTH CARE
The annual cap on deductible contributions to HSAs rises in 2024 to $4,150 for account owners with self-only coverage and $8,300 for those with family coverage. People born before 1970 can put in an extra $1,000.
Eligibility for HSAs is restricted. You must have a high-deductible health plan. The minimum policy deductible for 2024 is $1,600 for self-only coverage and $3,200 for family coverage. Additionally, out-of-pocket costs, including copayments, can’t exceed $8,050 for individual coverage and $16,100 for family coverage in 2024.
Here are the limits on deducting long-term-care premiums for 2024. Taxpayers who are age 71 or older can write off as much as $5,880 per person. Filers age 61 to 70…$4,710. Those who are 51 to 60 can deduct up to $1,760. Individuals who are 41 to 50 can take $880. And people age 40 and younger…$470. For most, long-term-care premiums are medical expenses deductible only by itemizers on Schedule A and only to the extent that total medicals exceed 7.5% of AGI. Self-employed individuals can deduct the premiums on Schedule 1 of the 1040.
FRINGE BENEFITS
Employees covered by health flexible savings accounts can defer up to $3,200.
The cap on tax-free employer-provided parking for 2024 is $315 a month. The exclusion for mass transit passes and commuter vans matches that amount.
U.S. taxpayers working abroad have a $126,500 income exclusion for 2024.
FORM 1099K
The Revenue Service delays the lower dollar threshold for 1099-K reporting. A 2021 law requires third-party settlement networks, such as PayPal, Venmo and Square, to send 1099-Ks to payees who are paid more than $600 a year for goods and services. It was scheduled to begin with 2022 1099-K forms sent out in 2023. The rule got lots of slack, so IRS has now postponed it for the second year in a row.
2023 Forms 1099-K sent out this year will be covered by the old rules. Forms will be sent to payees with over 200 transactions, who were paid over $20,000.
2024 Forms 1099-K sent out in 2025 will have a $5,000 reporting threshold.
EFILING
If filing 10 or more information returns, they must be electronically filed. The previous 250-return threshold for e-filing has been drastically lowered, beginning with 2023 information returns filed this year. The e-filing requirement applies to 1099s, W-2s, 1098s and many other forms. All information returns are combined for purposes of meeting the 10-return threshold for e-filing. IRS has an online portal to e-file Forms 1099. Information Returns Intake System or IRIS is free for businesses of any size, but you’ll need an ID.me account to use it. Filers who can’t comply can use Form 8508 to apply for a hardship waiver.
ESTATE & GIFT TAX
The lifetime estate and gift tax exemption for 2024 is $13,610,000…
More estate tax liability qualifies for an installment payment tax break. If one or more closely held businesses make up greater than 35% of a 2024 estate, as much as $740,000 of tax can be deferred, and IRS will charge only 2% interest.
The annual gift tax exclusion is $18,000 per donee. You can gift up to $18,000 ($36,000 if your spouse agrees) to each child, grandchild or any other person in 2024 without having to file a gift tax return or tap your lifetime estate and gift tax exemption.