Happy New Year January 2025!!!
I hope you had a nice Holiday Season and were able to spend quality time with family and friends. In the Denver area, we were blessed with sunny, dry weather, although it would have been nice to have a white Christmas as enjoyed by the New Yorkers this year!
NEW TAX LAWS
As was the case the last year, no major changes in the tax laws were enacted by the Congress. Whatever minor changes were effective in 2024 were a result of prior tax laws.
TAX LAW CHANGES
- The filing deadline is Tuesday April 15, 2025.
- As usual, the standard deduction amounts have been adjusted for inflation. The amounts for 2024 are $14,600 for single filers and $29,200 for married filers. Taxpayers over 65 or blind will receive an additional deduction of $1,550 -$1,900 depending on filing status.
- Child Tax Credit for children under the age 17 remains at $2,000. The amount of Additional Child Credit has been increased to $1,700. Credit for other dependents remains at $500.
- Credit of up to $7,500 is available for buyers of new as well as used electric vehicles. This credit is now called Clean Vehicle Credit. To claim this credit, the vehicle has to be placed in service after 2022.
- For last year, the standard mileage rate was 67¢ for business use; medical mileage rate was 21¢; and charity rate was 14¢. The corresponding rates for 2025 are: 70¢, 21¢ and 14¢.
- IRA contribution limit for 2025 is $7,000, unchanged from 2024. The “catch-up” provision for age 50 and older taxpayers remains at $1,000. Limit for 401K plan has been raised to $23,500. Catch-up contribution for taxpayers over the age 50 remains at $7,500.00. SIMPLE IRA plan contribution limits for 2025 are $16,500/$3,500.
- The Secure 2.0 Act raised the age at which a retiree has to start taking a Required Minimum Distribution (RMD) to 73. The Act also provided RMD relief if you are age 73 or older and are still working and taking part in your company’s retirement plan. This provision is not available to those who own 5% or more of the company for which they are working.
- Limit for contributing to a Flexible Spending Account (FSA) has been increased to $3,300 for the year 2025.
- Limits imposed on deductibility of mortgage interest remain in effect for the year 2024 (maximum loan principal should be $750K). Likewise, the cap of $10,000 for state and local taxes (SALT) remains for 2024.
- The estate tax exemptions for 2024 and 2025 are $13.61M and $13.99M per individual. The federal estate and gift tax rates remain at 40%.
- The annual gift exclusion amount has been increased from $18,000 in 2024 to $19,000 in 2025.
- Payments received from family and friends using a cash payment app (Cash App, Venmo, Zelle) WILL NOT BE reported on Form 1099- K. A lot of people are concerned about this.
- As I had mentioned in my last year’s letter, IRS is requiring taxpayers to provide information on cryptocurrency transactions. Please bring with you transaction registers, annual gain/(loss) statements, Forms 8949, etc. with you when you visit us for filing your 2024 tax returns.
For a few years now, we have strongly recommended that all taxpayers voluntarily apply for an IPPIN (Identity Protection Personal Identification Number). Ordinarily, IRS will assign you such a PIN if your identity was compromised. However, we feel you should get it anyway. This will provide an additional layer of protection. For a joint return, each spouse must get their own PIN. Please visit https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin. Please keep in mind that you need a new PIN for each year’s filing. For 2024 filing, you will be able to apply after 01/15/25.
Soon, it will be time to set up your appointment. Please call 303•922•5522303•922•5522, send an email to info@eminance.com or set up an appointment online at https://www.eminance.com/book-appt/. Either Emily, Katie or Kirit would be glad to help you reserve your favored time slot in our calendar. We take tax appointments from 7:30 am to 6 pm on weekdays (except Thursdays), and from 9 am to 4 pm on Saturdays. We use Thursdays for catching up on backlog. Please bring all tax documents as well as personal IDs (SS cards & Driver’s licenses) with you when you come for your appointment. We hope to see you soon!