As we begin the new year, we wanted to give you important information that may help you with your taxes.
Listed below are topics to consider for 2024:
Withholding Enough Federal Taxes
If you were married or divorced last year and if you added any children to your household, this may affect your federal taxes. Be sure to adjust your federal withholding with your employer. In addition, if you have an increase in your income (your pay and/or expect to receive a bonus in 2024) you may want to have extra withholding. This is accomplished by completing a 2024 W-4 form and given to your employer.
Any extra income (from taxable IRA distributions, new Social Security income, capital gains on taxable investments, and business income, etc.) may not have enough federal taxes withheld during the year and the government may assess a penalty AND interest. This can be avoided by sending in money to the federal government during the year – this is called “paying estimated taxes”.
New Mileage Rate for Business Use
The rate for 2024 is $.67 (up from 65.5 cents in 2023).
Social Security Income Increase
The cost-of-living increase for those receiving Social Security is 3.2% for 2024.
Social Security Earnings Withholding
The contribution and benefit base (maximum limit on earnings) for 2024 is $168,600. For self-employment income, the tax rate is 12.4%
1099-K Reporting
Reporting of income earned from third parties (for example: eBay, PayPal, Venmo, Etsy, and Airbnb) is expected to be required in 2024 for amounts of $5,000 or more – this has not yet been finalized. Previously, the amount was $600 set to begin in 2023 per The American Rescue Plan Act of 2021.
As always, please reach out should you have any questions about this information.
We hope you have a healthy and Happy New Year!