Everything You Need to Know About Taxes
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Everything you need to know about taxes in 2024 can be read in this article. The majority of the changes brought to the U.S. Tax Code with the Tax Cuts and Jobs Act of 2017 still continues. The TCJA will run through 2025 and this should be the year where we see most of the changes to the tax code.
Just like any other year, the biggest question about the new tax season is the standard deduction. It is expected that the IRS will increase the standard deduction by $200 for single filers and about $300 to $350 for those who file as head of household.
Standard Deduction 2024
Given the IRS increased the standard deduction by $200 in two consecutive years, the same increase looks very possible. The same goes for the head of household. If the standard deduction increase for the 2024 tax season were to be the same as other years, here is how it would look like:
| Filing Status | Standard Deduction ($) |
|---|---|
| Single | $12,600 |
| Married Filing Separetely | $12,600 |
| Married Filing Jointly | $25,200 |
| Qualifying Widow(er) | $25,200 |
| Head of Household | $18,950 |
These are just the estimates as of now. Once the IRS announces the 2024 standard deduction with the tax brackets, we will keep it updated against any changes.
Should I itemize or take the standard deduction?
This question has a simple answer but it is asked every tax season. If your itemized deductions is more than the standard deduction, itemize. If not, take the standard deduction. It is as simple as that.
It’s the same for a lot of other things regards to your taxes though. For example, if you’re unsure about filing your taxes separately or jointly with your spouse, calculate and see it for yourself. It all comes down to trying and seeing it for yourself. It is possible that in certain situations both options will be similar.
If your itemized deductions is at a similar amount with the standard deduction you’re eligible, take the standard deduction. This means less work on your tax return. This also applies to the filing status as well. If you’re paying the same tax, file jointly since it means less paperwork and the cost of filing is less.
Tax Brackets (Tables)
A new tax season wouldn’t be complete without talking about the tax brackets. The IRS adjusts the tax brackets against inflation and changes to the cost of living. This mostly means an increase.
One thing that stays the same every year which we guarantee that will be the same in 2024 is the marginal tax rates. For the 2024 tax season, the tax rates are 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent.
It is good to know how the tax brackets work though. Assume your tax rate is 32 percent. This doesn’t mean you will pay 32 percent of your taxable income in taxes. You will pay 35 percent of the amount that exceeds the maximum for the 32 percent bracket. With that said, you will start gradually and pay 10 percent of your taxable income up to the amount that begins for the 12 percent and so on.
Here is a better example for you to understand it.
Taxable Income: $200,000
Filing Status: Single
A single person with a taxable income of $200,000 will be placed in the 32 percent tax bracket. Here is how much the taxpayer will pay in each bracket.
10 percent of taxable income up to $9,875 which would equate to $987.50. Then:
$987.50 + 12 percent of the amount over $9,875
$4,617.50 + 22 percent of the amount over $40,125
$14,605.50 + 24 percent of the amount over $85,525
$32.271.50 + 32 percent of the amount over $163,300
Since the 35 percent tax bracket begins at $207,350, the taxpayer won’t pay more than 32 percent in taxes. The 32 percent tax rate will begin after $163,300 up to $200,000. It means 32 percent of $36,700.
Having all this said, instead of thinking tax brackets as something whole, think of them as cups you need to fill before you get to your maximum tax rate.
2024 Tax Changes
The standard deduction and the tax brackets are the two fundamentals of the U.S. tax law. Other than these two, there are surely some other changes that will affect your taxes.
First and foremost, the most important change you may want to know before you file taxes is how much you can deduct for your qualifying medical expenses. The taxpayers could deduct qualifying medical expenses that exceed 7.5 percent of their AGI. This limit is now moved up to 10 percent. This change means you will lose 2.5 percent of your AGI in deductions when you file a tax return in 2024.
This only goes if you itemize though. Given the standard deduction is only expected to be increased, taking it and leaving it there is definitely going to be more optional to more taxpayers.
