2024 Tax Season Changes

2024 Tax Changes

December 12, 2024 | Collins Consulting

As we approach the 2024 tax season, the Collins Consulting team has been very busy with continuing education and preparing for the new tax year. This coming tax season we will again be requiring all clients to complete our individual tax questionnaire. Since we do not know the many life changing events that could occur each year for you, the individual tax questionnaire will be very beneficial to let us know of any changes and provide a smooth and accurate tax preparation process. The questionnaire will be available within the coming weeks.

All tax documents can be provided to us via upload within the Individual Tax Questionnaire itself, email, fax, mail or in -person drop offs, as follows:

  • Upload within the Individual Tax Questionnaire
  • Email documents to customerservice@collinsconsultingservice.com
  • Fax documents to 712-314-6334.
  • Mail paper copies to PO Box A Treynor, IA 51575
  • Local clients can securely drop off paper tax documents 24/7 in a box inside the main entrance of TS Bank in Treynor, Iowa. The drop box is located inside the front door near the ATM. We request you drop off copies rather than original tax documents.

For those clients that drop off documents, we ask them to drop off copies rather than the originals.

Please drop off, email, or fax all documents at one time.

Just like past years, a Collins Consulting tax preparer will contact you via phone or email to review your return before it is finalized. Once the return is finalized, we will send the tax returns for your signature via DocuSign. We will be automatically notified once you have e-signed. We recommend you download and save a copy of your tax return from the DocuSign email for your records. If you do not have access to a computer or prefer a paper copy of your return, you may request a paper copy, and we can discuss your delivery choice at the time of your return review.

Generally, if your tax return is similar to last year’s, your 2024 tax preparation fees can be expected to increase by 5-10%.

2024 Tax Law Changes

(subject to revision before year end)

  • Inflation adjusted tax schedules and standard deduction (approx. 5.4%).
  • Inflation adjusted social security income increase of 3.2%.
  • IRA contribution limit $7,000 or $8,000 for over age 50.
  • Required Minimum Distribution (RMD) must start the year after turning age 73.
  • Gift limit - $18,000 – previously $17,000 - excess requires filing a gift tax return.
  • IRS interest rates for not paying timely is 8% per year.
  • Business mileage rate 67 cents per mile.

Other Federal Tax Law Changes

  • Bonus depreciation 60% - previously 80% - no change to first year depreciation.
  • 1099K is required to be filed and reported for online sales over $5,000
    (i.e., Venmo, PayPal, Zelle, etc.) also, eBay, Airbnb, Etsy Vrbo.
  • Virtual or digital currency continues to be treated as a capital asset and is required to be reported when sold.
  • Other income earned in Digital activity could require reporting of self-employment income.
  • FinCen Returns: The Corporate Transparency Act requires filing a FinCen return to report ownership of corporations, partnerships, or LLCs is due January 1, 2025. This return reports direct or indirect ownership of the company or LLC. The penalty for failure to file is $500 a day capped at $10,000.

2024 Iowa State Tax Law Changes:

  • Iowa lowered its rate to 3.9%.
  • Iowa resident retirement distributions are not taxable if taxpayers are over age 55 along with social security received.
  • For S Corporations and LLC’s, Iowa offers a voluntary election to pay Iowa state taxes for its owners. This process allows for a reduction federal taxable income by the amount of state income taxes paid in the calendar year those taxes are paid. This would be advantageous for taxpayers that do not itemize on the federal tax return, or state taxes paid plus home taxes exceed $10,000, so they cannot get a federal tax deduction for the state income taxes paid. The individual taxpayer gets credit on their personal return for this payment made by the LLC or S Corporation.

2024 Nebraska state Tax Law Changes:

  • Nebraska property tax credit for the school tax portion was discontinued. This credit was replaced with lower property taxes. The community property tax credit continues for 2024. 

2025 US Federal Tax Law Changes

  • Inflation adjusted tax schedules and standard deduction (approx. 2.7%).
  • Inflation adjusted social security income increase of 2.5%.
  • Medicare Part B premium will increase 6% or $10.30 per month.
  • IRA contribution limit did not change from $7000 or $8000 for over age 50.
  • Bonus depreciation declines from 60% to 40%. No change in first year depreciation.
  • Gift limit - $19,000 – previously $18,000 - excess requires filing a gift tax return.
  • The Corporate Transparency Act requires filing a FinCen return to report ownership of corporations, partnerships or LLC. This return is to report direct or indirect ownership of the company or LLC. A new entity established in 2024 had only 30 days to file this report. The penalty for failure to file is $500 a day capped at $10,000.

2026 US Federal Tax Law Changes (expect changes)

  • Medicare will start Prescription cost negotiation.
  • The 2017 Tax Cuts and Jobs Act expires. If not renewed, federal tax rates will revert back to higher 2016 levels.
    (i.e. 12% to 15%, 22% to 25%, etc.)
    Miscellaneous itemized deduction may be reinstated.
    Personal exemption amount may be reinstated.
  • Qualified business income – 20% reduction ends.
  • Estate Tax exemption of $11.2m reverts to 2016 level of $5.6m.
  • Child tax credit decreases from $2000 to $1000 and the new $500 credit over age 16 ends.
  • Bonus depreciation declines from 40% to 20%. No change in first year depreciation.

FinCen Returns: The Corporate Transparency Act requires filing a FinCen return to report ownership of corporations, partnerships, or LLCs is due January 1, 2025. This return reports direct or indirect ownership of the company or LLC. The penalty for failure to file is $500 a day capped at $10,000.

About Collins Consulting: Collins Consulting is a full-service tax and accounting firm, started in 1970 by Norm Collins in Treynor, Iowa. In August of 2018, TS Banking Group acquired Collins Consulting as a wholly-owned subsidiary.

https://www.irs.gov/newsroom/
https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/2023-changes-iowa-individual-income-tax
https://revenue.nebraska.gov/about/2024-nebraska-legislative-changes