Helpful Tax Information for 2024
Here are some tax tips to help you for planning purposes:
It comes as a surprise to many taxpayers that the tax credit amount drops by $1,500 when your child/dependent reaches age 17. It changes from the Child Tax Credit which has a maximum amount of $2,000 to the Other Dependent Credit which has a maximum of $500. This can cause a reduction to the refund that a taxpayer was expecting to receive or may increase what the taxpayer owes to the IRS.
Did you know that you can now roll unused 529 funds into a beneficiary’s Roth IRA without a tax penalty? This is a new provision that started in 2024 and allows you to roll unused 529 funds into the beneficiary’s Roth IRA without incurring the 10% penalty. This is subject to a lifetime limit of $35,000. This is a nice solution for anyone who has extra funds sitting in a 529 account that had not been fully used for college or for a child who decided not to go to college. There are other details to this plan if you are interested to pursue this option.
Increase to the standard deduction amount:
Filing status 2023 Standard Deductions 2024 Standard Deductions
Single $13,850.00 $14,600.00
Married, filing separately $13,850.00 $14,600.00
Married, filing jointly $27,700.00 $29,200.00
Head of household $20,800.00 $21,900.00