What's New

Tax Law Highlights TY25

Tax-Aide Scope Changes

TBA

Maine Updates

TBA

Federal TY25 Updates (IRS List)

• IR-2024-273, Oct. 22, 2024

• Revenue Procedure 2024-40

• OBBB Act of 2025 - Provisions 

Policy and Procedures Update

Taxpayer should initial bank account information found on Client Form Listing Summary page or Form 1040 (refund only) in QR print set.

Tax Law Highlights TY2024

Click here for Previous Tax Year Updates

New TY2024 Intake/Interview Booklet - NTTC Form 13614-C

• Required Modifications as of February 7, 2025

• Intake/Interview and Quality Review Sheet - NTTC Modified

Tax-Aide Scope Changes

• Olympic and Paralympic medals, and USOC prize money

  • Schedule 1 line 8m, Olympic and Paralympic medals, and USOC prize money

  • Schedule 1 line 24c, Nontaxable amount of the value of Olympic and Paralympic medals and USOC prize money reported on line 8m. If AGI is not more than $1,000,000 ($500,000 MFS), a corresponding adjustment to remove the income is made here.

• Schedule C Expense Limit increased from $35,000 to $50,000 (announced 1/24/25). 

Taxpayer Copy Print Set Requirements

The Taxpayer Copy print set is the copy of the tax return that the taxpayer should receive. This print set MUST INCLUDE the following:

• The "File Copy, Do Not Mail" watermark on each page

• The Custom Consent forms: all copies whether or not signed by the taxpayer/spouse. Those included in the NTTC Interview and Intake form do not appear to meet the current legal or regulatory requirements. Refer to IRS Pub 4299, p. 7-9.

• The Client Form Listing Summary: which now shows the direct deposit/debit and bank information on federal and state returns under the forms list. This form can be used by the counselor and taxpayer to verify the accuracy of taxpayer personal AND banking information that the taxpayer(s) can then initial. It is also a great way to review a summary of tax information entries with the Taxpayer(s) before showing them the rest of the return.

• See TaxSlayer Online page FMI.

Tax Law Updates/Changes - Maine

• See Maine State Taxes pages during January FMI

Tax Law Updates/Changes - Federal

2024 Quick Reference chart - Please print for your use.

Federal Tax Form Changes

• Form 1040, U.S. Individual Income Tax Return, includes a checkbox and entry field in the Filing Status section that allows taxpayers to elect to treat a nonresident alien spouse or dual-status alien spouse as a resident.

• Form 1040, Schedule 1, Additional Income and Adjustments to Income, includes an entry field for taxpayers who had amounts reported on a Form 1099-K in error or for personal items sold at a loss.

• Form W-2, Wage and Tax Statement, includes a new Box 12 code II for Medicaid waiver payments excluded from income under Notice 2014-7.

• Taxpayers will receive Form 1099-K, Payment Card and Third Party Network Transactions, when reportable proceeds exceed $5,000 for 2024, although they may receive the form at a lower amount. This threshold applies to third party settlement organizations.

• Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, adds two new codes for the exceptions to the additional tax on early distributions for domestic abuse victims and emergency personal expense distributions, effective for distributions made after 12/31/2023.

• Publication 1244, Employee’s Daily Record of Tips and Report of Tips to Employer, is obsolete.

• Publication 531, Reporting Tip Income, will no longer be updated annually. It is changed to continuous use.

• Form 1099-R Box 12: Code G for employer contribution to Roth IRA with Box 2a taxable  amount

Tax Law Changes - New or Noteworthy Provisions

• Waiver of the 10% additional tax on early distributions for emergency personal expense distribution of as much as $1,000 beginning in 2024. The distribution may be repaid within three years from the date of distribution.

• Beginning in 2024, domestic abuse victims may distribute the lesser of $10,000 or 50% of accrued benefit from an eligible retirement plan without the 10% early distribution additional tax. The distribution may be repaid within three years from the date of distribution.

• Qualified tuition plan rollovers can be made to fund Roth IRAs beginning in 2024, subject to limitations.

• Starting in 2024, an employer retirement plan may provide for Roth nonelective or matching contributions.  These amounts are taxable to the employee and will be reported on Form 1099-R using code G in box 7; the amount of the taxable distribution (box 2a) will be the same as the gross distribution (box 1).

• Required minimum distributions to certain designated beneficiaries from inherited accounts of a decedent who died in 2020 through 2023 and whose retirement account was in payout mode have been waived for 2021 through 2024 (previously 2021 through 2023).

• The first-time homebuyer credit 15-year repayment period for homes purchased in 2008 began in 2010 and ends in 2024.

Annual Inflation Adjustments

Personal exemption amount

• The deduction for all personal exemptions is suspended (reduced to zero)

• Effective for tax years 2018 through 2025.

Standard deduction

The standard deduction for taxpayers who do not itemize deductions on Sch A (Form 1040) has increased. The standard deduction amounts for 2024 are:

• $29,200 – Married filing jointly or qualified surviving spouse (increase of $1,500)

• $21,900 – Head of household (increase of $1,100)

• $14,600 – Single or married filing separately (increase of $750)

Taxpayers who are 65 and older or are blind

For 2024, the additional standard deduction amounts for taxpayers who are 65 and older or blind are:

• • $1,950 for single or head of household (increase of $100)

  • $1,550 for married taxpayers or qualified surviving spouse (increase of $50)

Qualifying relative: Gross income limit of $5,050 ($350 increase).

Dependents

For 2024, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of (1) $1,300, or (2) the sum of $450 and the individual’s earned income.

Qualified charitable distributions

For 2024, the maximum amount of qualified charitable distributions not included in gross income is $105,000 (an increase of $5,000). The maximum amount applies to each spouse if filing jointly.

Foreign earned income exclusion

For 2024, the maximum foreign-earned income exclusion is $126,500.

Certain expenses of elementary and secondary school teachers

The deduction allowed consists of expenses paid or incurred by an eligible educator for use in the classroom, which is $300 (no change).

IRA deduction amount and modified AGI (MAGI) limits for traditional and Roth IRA contributions

For 2024, the maximum combined Traditional IRA deduction or Roth contribution is $7,000 ($8,000 if age 50 or older). For taxpayers who are covered by a retirement plan at work, the deduction for contributions to a traditional IRA is reduced (phased out) if the MAGI is:

• • more than $123,000 but less than $143,000 for a married couple filing a joint return or a qualifying surviving spouse.

  • more than $77,000 but less than $87,000 for an individual filing as single, head of household, or married filing separately and did not live with the spouse at any time during 2024.

  • less than $10,000 for a married individual filing a separate return who lived with the spouse during 2024.

For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered (and the spouses live together or file a joint return), the deduction is phased out if the couple’s MAGI is between $230,000 and $240,000.

For 2024, maximum Roth IRA contributions phase out based on MAGI as follows:

• • Married filing jointly or qualifying surviving spouse with MAGI between $230,000 and $240,000

  • Single, head of household, or married filing separately and didn’t live with the spouse at any time in 2024 with MAGI between $146,000 and $161,000

  • Married filing separately, lived with the spouse at any time during the year, and MAGI is between $0 and $10,000

Standard mileage rate

For 2024, the following rates are in effect:

• • 67 cents per mile for business miles driven

  • 21 cents per mile driven for medical or moving purposes

  • 14 cents per mile driven in service of charitable organizations

Student loan interest deduction

The deduction begins to phase out for taxpayers with MAGI more than $80,000 ($165,000 for joint returns) and is completely phased out for taxpayers with MAGI of $95,000 or more ($195,000 or more for joint returns).

Health savings account (HSA) (Adjustments)

• $4,150 (+ $300) Individual contribution limit

• $8,300 ($550) Family contribution limit

• $1000 additional contribution limit for those 55 and older.

Long-term care insurance

The deductible amount of qualified long-term care insurance premiums for itemized deductions purposes or for calculating the self-employed health insurance deduction is limited for 2024: (each amount is per person)

• • Age 40 or under: $470 ($10 reduction)

  • Age 41 to 50: $880 ($10 reduction)

  • Age 51 to 60: $1,760 ($30 reduction)

  • Age 61 to 70: $4,710 ($60 reduction)

  • Age 71 and over: $5,880 ($80 reduction)

For calendar year 2024, gross income includes the amount received under a long-term care policy over the per-diem amount of $410 (reduction of $10) or the actual cost of long-term care services, if more.

Deduction for qualified business income

For 2024, the threshold is $383,900 for married filing joint returns and $191,950 for all other returns.

Household employee

An employer who paid less than $2,700 in wages in 2024 (a $100 increase) isn’t required to provide a Form W-2.

Kiddie tax

To be subject to the kiddie tax, the individual must have an unearned income of at least $2,600 in 2024.

Retirement savings contribution credit

To claim this credit in 2024, the taxpayer’s modified adjusted gross income (MAGI) must not be more than

• • $38,250 for single, married filing separately, or qualifying surviving spouse (increase of $1,750)

  • $57,375 for head of household (increase of $2,625)

  • $76,500 for married filing jointly (increase of $3,500)

Earned income credit (EIC)

For 2024, the maximum credit increases to:

• • $7,830 with three or more children

  • $6,960 with two children

  • $4,213 with one child

  • $632 with no children

Earned income and AGI amounts increased for EIC

To be eligible for a full or partial credit, the taxpayer must have earned income and AGI of at least $1 but less than:

• • $59,899 ($66,819 if married filing jointly) with three or more qualifying children

  • $55,768 ($62,688 if married filing jointly) with two qualifying children

  • $49,084 ($56,004 if married filing jointly) with one qualifying child

  • $18,591 ($25,511 if married filing jointly) with no qualifying child

  • Maximum investment income $11,600

Investment Income for EIC

Taxpayers whose investment income is more than $11,600 in 2024 cannot claim the EIC.

Child tax credit/additional child tax credit

The maximum refundable amount of the credit is $1,700 per child for 2024.

Premium tax credit

Advance Premium Tax Credit (APTC) repayment caps for 2024 (refer to Pub 4491, Pg xi)

The federal poverty line tables are adjusted for inflation.

Through 2025, taxpayers with a household income that exceeds 400 percent of the federal poverty line for their family size may be allowed a premium tax credit (PTC).

Congress may enact additional legislation that will affect taxpayers after this publication is released. Check the latest edition of Pub 4491X.