Tax Changes for the 2024 Filing Season: What You Need to Know
Tax season can be a stressful time for many individuals, but staying informed about the latest changes can make the process a little bit easier. In this article, we will discuss three important tax changes for the 2024 filing season that you need to know.
Delay of the $600 Rule for 1099-K Reporting
One of the most significant changes is the delay of the so-called $600 rule for 1099-K reporting. This rule would have required millions of people who were paid at least $600 for goods and services through third-party networks like PayPal, Venmo, and Square to receive a Form 1099-K. However, the Internal Revenue Service (IRS) has postponed this rule for the 2023 federal tax returns.
While the rule has been delayed, it is still possible that you might receive a 2023 1099-K in the coming weeks from providers such as Etsy, StubHub, or eBay. If you receive a 1099-K, it is crucial to ensure that the information on the form matches your records. If there are any discrepancies, make sure to contact the third-party payment network that sent the form.
Taxability of State Rebate Payments
In 2023, some states provided special rebate payments or stimulus checks to their residents. The IRS has recently announced that it won’t challenge the taxability of most special state payments. However, it is important to note that amounts issued in certain states, such as Minnesota Walz checks and Arizona Families Tax Rebates, are considered taxable income.
This news comes as a relief for many taxpayers who won’t have to report most special state payments on their federal income tax returns. However, if you received a state payment in 2023 and are unsure about its taxability, it is recommended to consult a tax professional before filing your federal return.
Expansion of IRS Free File
For individuals with an adjusted gross income of $79,000 or less, there is good news. The IRS has expanded its Free File service, allowing more taxpayers to file their federal income tax returns for free. This $6,000 increase in the income limit from last year provides an opportunity for a larger number of individuals to benefit from this service.
By visiting the IRS Free File site, taxpayers can easily connect with the agency’s tax preparation partners and find the right product for their needs. This service has been available since January 12, so if you haven’t filed your taxes yet and are interested in using Free File, be sure to check it out.
Staying Informed and Prepared
As the 2024 filing season approaches, it is crucial to stay informed about the latest tax changes. The delay of the $600 rule for 1099-K reporting, the taxability of state rebate payments, and the expansion of IRS Free File are all important updates that can impact your tax situation. By being aware of these changes and consulting with tax professionals when needed, you can ensure a smoother and more successful tax filing experience.
Remember, this article is meant for informational purposes only and should not be interpreted as personalized financial advice. For specific guidance regarding your tax situation, consult a qualified tax professional.
