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Topic # 1 - Here’s a summary of the Tax Cuts and Jobs Act (TCJA) without citations:
Key Changes for Individuals:
Income Tax Rates: The TCJA kept seven individual income tax brackets but lowered the rates. For example, the top rate fell from 39.6% to 37%.
Standard Deduction: The standard deduction nearly doubled. For 2024, it’s $14,600 for single filers and $29,200 for married couples filing jointly.
Personal Exemption: The personal exemption was suspended through 2025.
Child Tax Credit: The credit increased to $2,000 per child, with a new $500 credit for non-child dependents.
Health Coverage Mandate: The individual mandate requiring health insurance was eliminated.
Key Changes for Businesses:
Corporate Tax Rate: The corporate tax rate was reduced to a flat 21%.
Pass-Through Entities: Preferential tax treatment was introduced for pass-through businesses.
Expiration of Provisions:
Many individual tax benefits are set to expire after 2025 unless Congress takes action.
If you have any specific questions about the TCJA or how it might affect you, feel free to ask!
Topic #2 - The Virginia Pass-Through Entity Tax (PTET) is an elective tax that allows qualifying pass-through entities (PTEs) to be taxed at the entity level rather than at the individual owner level. Here are some key points:
Election: PTEs can choose to pay an elective income tax at a rate of 5.75% on their Virginia taxable income and receive a federal deduction.
Entities Covered: This includes S corporations, partnerships, and limited liability companies (LLCs) that are recognized as separate entities for federal income tax purposes.
Credit for Owners: Owners of PTEs can claim a refundable income tax credit for the amount of income tax paid by the PTE.
Filing Requirements: PTEs must file an annual Virginia income tax return using Form 502 or Form 502PTET.
Credit for Taxes Paid to Other States: The legislation allows individuals to claim a credit for taxes paid to other states with similar PTE taxes.
This legislation was created to combat the loss of tax deductions on Schedule A and allowing a tax savings at the federal level.
Topic #3 - The top 10 items to consider for your 2024 income tax returns.
1. Tax Brackets: Income thresholds for tax brackets have increased due to inflation, which might place you in a different bracket compared to last year.
2. Standard Deductions: The standard deduction amounts have been adjusted for inflation. For 2024, the standard deduction is $14,600 for single filers, $29,200 for married couples filing jointly, and $21,900 for heads of household.
3. Alternative Minimum Tax (AMT): The AMT exemption amounts have increased. For 2024, the exemption is $85,700 for single filers and $133,300 for married couples filing jointly.
4. Earned Income Tax Credit (EITC): The maximum EITC for taxpayers with three or more qualifying children has increased to $7,830.
5. Flexible Spending Accounts (FSA): The contribution limit for health FSAs has increased to $3,200.
6. Foreign Earned Income Exclusion: The exclusion amount for foreign earned income has increased to $126,500.
7. Gift and Estate Tax: The annual gift tax exclusion has increased to $18,000 per recipient. The lifetime estate and gift tax exemption is now $13,610,000.
8. Retirement Contributions: Contribution limits for retirement accounts have increased. For example, the maximum 401(k) contribution is now $23,000, with an additional $7,500 catch-up contribution for those aged 50 and older.
9. Electric Vehicle (EV) Tax Credit: Eligible buyers of qualifying EVs can now transfer the federal EV tax credit of up to $7,500 to the dealer at the time of purchase, reducing the car’s purchase price.
10. Adoption Tax Credit: The maximum adoption credit has increased to $16,810.
These changes can impact your tax planning and filing, so it’s a good idea to review them carefully and consider how they might affect your situation. If you have any specific questions or need further details, feel free to ask!
