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W-2s to employees – Give your employees their copies of Form W-2 by January 31. If an employee agreed to receive Form W-2 electronically, post it on a website accessible to the employee and notify the employee of the posting by January 31.

For 2024, you will use Form 1040 or, if you were born before January 2, 1956, you have the option to use Form 1040-SR. You may only need to file Form 1040 or 1040-SR and none of the numbered schedules, Schedules 1 through 3. However, if your return is more complicated (for example, you claim certain deductions or credits or owe additional taxes), you will need to complete one or more of the numbered schedules. Below is a general guide to which schedule(s) you will need to use based on your circumstances.

Have additional income, such as business or farm income or loss, unemployment compensation, prize or award money, or gambling winnings. – Schedule 1, Part I
Have any deductions to claim, such as student loan interest deduction, self-employment tax, or educator expenses. – Schedule 1, Part II
Owe AMT or need to make an excess advance premium tax credit repayment. – Schedule 2, Part I
Owe other taxes, such as self-employment tax, household employment taxes, additional tax on IRAs or other qualified retirement plans and tax-favored accounts. – Schedule 2, Part II
Can claim a nonrefundable credit other than the child tax credit or the credit for other dependents, such as the foreign tax credit, education credits, or general business credit. – Schedule 3, Part I
Can claim a refundable credit other than the earned income credit, American opportunity credit, or additional child tax credit, such as the net premium tax credit, health coverage tax credit, or qualified sick and family leave credits from Schedule H or Schedule SE. Have other payments, such as an amount paid with a request for an extension to file, excess social security tax withheld, or want to defer the payment of some household employment or self-employment tax you may owe (for certain Schedule H and Schedule SE filers). – Schedule 3, Part II

WHAT’S NEW?

Here are brief descriptions of the major 2024 tax updates affecting taxpayers:

1. Income Tax Bracket

There income brackets for marginal tax rates were adjusted to reflect inflation for 2024 returns. Here’s how they shake out:

37% for individual taxpayers with incomes over $609,350, and $731,200 for married couples filing jointly
35% for individual taxpayer incomes over $243,725, and $487,450 for married couples filing jointly
32% for individual taxpayer incomes over $191,950, and $383,900 for married couples filing jointly
24% for individual taxpayer incomes over $100,525, and $201,050 for married couples filing jointly
22% for individual taxpayer incomes over $47,150, and $94,300 for married couples filing jointly
12% for individual taxpayer incomes over $11,600, and $23,200 for married couples filing jointly
10% for individual taxpayer incomes of $11,600 or less, and $23,200 or less for married couples filing jointly

2. The standard deduction increased slightly

After an inflation adjustment, the 2023 standard deduction increases to $13,850 for single filers and married couples filing separately and to $20,800 for single heads of household, who are generally unmarried with one or more dependents. For married couples filing jointly, the standard deduction rises to $27,700.

3. Itemized deductions remain mostly the same

For most filers, taking the higher standard deduction is more practical and saves the hassle of keeping track of receipts. But if you have enough tax-deductible expenses, you might benefit from itemizing.

The following rules for itemized deductions haven’t changed much for 2023, but they’re still worth pointing out.

State and local taxes: The deduction for state and local income taxes, property taxes, and real estate taxes is capped at $10,000.
Mortgage interest deduction: The mortgage interest deduction is limited to $750,000 of indebtedness. But people who had $1,000,000 of home mortgage debt before December 16, 2017, will still be able to deduct the interest on that loan.
Medical expenses: Only medical expenses that exceed 7.5% of adjusted gross income (AGI) can be deducted in 2023.
Charitable donations: In 2023, the annual income tax deduction limits for gifts to public charities¹ are 30% of AGI for contributions of non-cash assets—if held for more than one year—and 60% of AGI for contributions of cash. If you give both can and non-cash assets, the overall limit is generally 50% of AGI.
Miscellaneous deductions: No miscellaneous itemized deductions are allowed.

4. IRA and 401(k) limits are slightly higher

The traditional IRA and Roth contribution limits in 2023 increased slightly from 2022. Individuals can contribute up to $6,500 to an IRA, and those age 50 and older also qualify to make an additional $1,000 catch-up contribution. In addition, the 2023 contribution limits for tax-deferred 401(k)s and Roth 401(k)s have increased to $22,500. If you’re age 50 or older, you qualify to make an additional $7,500 catch-up contribution for this tax year as well.

If you’re able to, consider maxing out your contributions to these accounts. Doing so can provide a huge boost to your retirement saves and potentially provide a tax deduction.

5. You can save a bit more in your health savings account (HSA)

For 2023, the maximum you can contribute to an HSA is $3,850 for an individual (up $50 from 2021) and $7,750 for a family (up $100). People 55 and older can contribute an extra $1,000 catch-up contribution.

To be eligible for an HSA, you must be enrolled in a high-deductible health plan (which usually has lower premiums as well). Learn more about the benefits of an HSA.

6. The Child Tax Credit could give you a tax break

Tax credits, which reduce the tax you owe dollar for dollar, are normally better than deductions, which reduce how much of your income is subject to tax. In 2023, the Child Tax Credit is $2,000 per child under age 17. The credit is also subject to a phase-out starting at $400,000 for joint filers and $200,000 for single filers. For other qualified dependents, you can claim a $500 credit.

7. The alternative minimum tax (AMT) exemption is higher

Until the AMT exemption enacted by the Tax Cuts and Jobs Act expires in 2025, the AMT will continue to affect mostly households with incomes over $500,000. For 2023, the AMT exemptions are $81,300 for single filers and $126,500 for married taxpayers filing jointly. The phase-out thresholds are $1,156,300 for married taxpayers filing a joint return and $578,150 for all other taxpayers. (Once your income for the AMT hits the phase-out threshold, your AMT exemption begins to phase out at 25 cents for every dollar over the threshold.)

8. The estate tax exemption is even higher

The estate and gift tax exemption, which is indexed to inflation, rose to $12,920,000 for 2023. But the now-higher exemption is set to expire at the end of 2025, meaning it could be essentially cut in half at that time if Congress doesn’t act.

The annual gift exclusion, which allows you to give money to your loved ones each year without incurring any tax liability or using up any of your lifetime estate and gift tax exemption, increases to $17,000 per recipient (up $1,000 from 2022).

Don’t get caught off guard

If you’re age 73 or older, make sure you’ve taken your required minimum distribution (RMD) from your retirement accounts before the end of the year or else you face a 25% penalty on any undistributed funds (unless it’s your first RMD, in which case you can wait until April 1, 2024).

If you haven’t contributed to your retirement accounts already, now is the time. Review your earnings for the year and take advantage of any deductions that can lower your tax bill. Tax season will be here before you know it, and it’s never too early to start preparing.

¹Operating charities, or qualifying public charities, are defined by Internal Revenue Code section 170(b)(1)(A). You can use the Tax Exempt Organization Search tool on IRS.gov to check an organization’s eligibility.